Two-stage newsboy problem for fashion products considering revenue sharing and return policies

Abstract

This study considers a single-period two-stage newsboy problem for fashion products. The risk of demand uncertainty is reduced when both parties consider revenue sharing and return policies. Different channel strategies by the manufacturer and the retailer under different business environments are taken into account. Three scenarios, Stackelberg game, joint decision, and bi-level decisions are examined. The objective is to maximize the profit of both manufacturer and retailer. Numerical examples and sensitivity analysis are provided to illustrate the theory.

Keywords:

• inventory
• revenue sharing
• return policy
• Stackelberg game
• bi-level