Positive vs. Negative Externalities in Inventory Management: Implications for Supply Chain Design

@article{Netessine2005PositiveVN,
  title={Positive vs. Negative Externalities in Inventory Management: Implications for Supply Chain Design},
  author={Serguei Netessine and Fuqiang Zhang},
  journal={Manufacturing & Service Operations Management},
  year={2005},
  volume={7},
  pages={58-73}
}
I this paper we analyze the impact of supply-side externalities existing among downstream retailers on supply chain performance. Namely, multiple retail firms face stochastic demand, purchase the product from the upstream wholesaler, and make stocking decisions that affect all other retailers in the same echelon. Two sources of inefficiencies exist in such a supply chain: One is double marginalization and the other is externalities among retailers. Whereas double marginalization always leads to… CONTINUE READING