Markdown money contracts for perishable goods with clearance pricing |
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Authors: | Charles X Wang Scott Webster |
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Institution: | 1. School of Management, State University of New York at Buffalo, 326 M Jacobs Management Center, Buffalo, NY 14260, United States;2. Whitman School of Management, Syracuse University, Syracuse, NY 13244, United States |
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Abstract: | It is common in practice that retailers liquidate unsold perishable goods via clearance pricing. Markdown money is frequently used between manufacturers and retailers in such a supply chain setting. It is a form of rebate from a manufacturer to subsidize a retailer’s clearance pricing after the regular season. Two forms of markdown money are percent markdown money, in which the markdown money is limited to only a certain percentage of the retail price markdown, and quantity markdown money, which is essentially a buyback contract or returns policy with a rebate credit paid to the retailer for each unsold unit after the regular season. We show both forms of markdown money contracts can coordinate the supply chain and we discuss their strengths and limitations. |
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Keywords: | Supply chain management Markdown money Clearance pricing Supply chain contracts |
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