• Journal of Korean Society of Industrial and Systems Engineering
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• v.18 no.34
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• pp.15-23
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• 1995

We study how to determine backorder cost at the warehouse in a one-warehouse/N-retailer distribution system such that channel efficiency (minimizing total system costs) is improved. We define backorder costs as compensation that the warehouse pays to the retailer for the number or orders delayed due to stockout at the warehouse. We answer two questions : (1) "Should the warehouse compensate for his backorder\ulcorner" and (2) "Is there any equilibrium for both the warehouse and retailer while they are seeking for their own profits\ulcorner" We show that : (1) "The warehouse should pay backorder costs for the sake of channel efficiency." and (2) "There exists an equilibrium that is infiuenced by the amount of compensation." First, we prove the existence of a mutually acceptable equilibrium for both the warehouse and the retailer, which is different from Nash equilibrium because they independently maximize their respective profits with incomplete information about each other. Second, we prove that the equilibrium moves to a point such that channel efficiency is improved if the warehouse compensates the retailers for his backorders. We show the existence of an optimal compensation that minimizes total system costs. Third, we show that the amount of optimal compensation increases as the ratio of mean lead time for the warehouse to that for the retailer increases.ouse to that for the retailer increases.

• Journal of the Korean Operations Research and Management Science Society
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• v.13 no.1
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• pp.10-23
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• 1988

This paper examines a deterministic, discrete-time, finite-horizon, production/distribution problem for a one-plant multi-retailer system. Production may occur at the plant in each time period. Customer demands at each retailer over a finite number of periods are known and must be met without backlogging. The plant as well as the retailers can serve as stocking points. The problem is to find a minimum-cost production/distribution schedule satisfying the known demands. We show that under a certain cost structure a nested policy is optimal, and present an efficient algorithm to find such an optimal policy. Planning horizon results and some computational saving schemes are also presented.

• Journal of Distribution Science
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• v.19 no.1
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• pp.37-47
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• 2021

Purpose: This study aims to review existing research on the definition, conceptualization, and measurement of relationship values to guide future research. This study specifically measures the relationship value between principals and retailers, which is still not widely discussed in previous research. Besides, to broaden our knowledge of the value-based determinants of competitive advantage, satisfaction, and retailer loyalty in business-to-business relationships. Research design, data, and methodology: This research assessed three alternative models of the relationship value construct's dimension structure and then tested for reliability, validity, and confirmatory factor analysis. The research sample is 185 retailers-data analysis using Structural Equation Modeling (SEM). Results: The results showed that product-based values and relationship-based values positively influenced competitive customer advantage, satisfaction, and loyalty. Conclusions: Relationship value construct can be measured and consist of five dimensions: product quality, delivery performance, customer orientation, service support, and personal interaction. They are key factors that maintain the relationship between principal and retailers. This study indicates that principals must invest more time and effort in building valuable relationships with their retailers. Finally, the value of relationships is a determinant of retailer performance: satisfaction and loyalty.

• Journal of Distribution Science
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• v.22 no.2
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• pp.11-20
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• 2024

Purpose: The primary objective of this study is to investigate the impact of website quality on impulse buying of the online retailer, which is mediated by positive emotion and moderated by personalized advertising. Research design, data and methodology: The present study used a survey methodology conducted on many user's smartphones. The sample in this study included 409 college students in Indonesia. Purposive sampling was used as the sampling technique. Data was collected by distributing questionnaires to many respondents through the Google Documents online survey. Results: The findings derived from the application of structural equation modelling for data analysis show that 1). Website quality affects impulse buying and positive emotion, and 2). The impact of website quality on impulse buying was mediated by positive emotion and moderated by personalized advertising. Conclusions: The findings presented in this study has significant theoretical implications that contribute to the existing concept on the relationship between website quality, positive emotion, personalized advertising and impulse buying. The findings of the research possess managerial implications. It can be used can as a reference in determining website quality and the appropriate personalized advertising that increases online impulse buying at online retailer In Indonesia.

• Journal of Distribution Research
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• v.13 no.2
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• pp.97-123
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• 2008

Recently, there has been a growing trend toward private brand. Although much has been written about the determinants of attitude and purchase intention on PB, little is known about the influence of manufacturer and retailer trust on private brand purchase. This research addresses three questions:(1) what impact do manufacturer and retailer trust have on private brand purchase?(2) What is a key mediating variable in the relationship retailer between trust(on retailer/manufacture) and purchase intention?(3) Are the impacts of these factors differ depending on the level of customer knowledge? The findings indicate that retailer trust directly influence on the perceived quality, attitude toward private brand, and purchase intention. Manufacturer trust affects on attitude and purchase intention, however, only when it is through perceived quality. In addition, the relative impact of theses two factors differs to some extent, depending on the level of consumer knowledge. When customer knowledge is relatively high, retailer trust is a very important factor influencing perceived quality, attitude and purchase intention. On the other hand, both retailer trust and manufacturer trust are considered when customer knowledge on private brand is low.

• Journal of Korean Institute of Industrial Engineers
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• v.15 no.2
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• pp.23-31
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• 1989

From the supplier's point of view, we examine the existence of a Pareto superior pricing schedule for one wholesaler with multiple retailers. In the case of multiple retailers, an order quantity pricing schedule should depends on the retailer's underlying characteristics. But identification of each retailer's characteristics may be impossible; rather, the wholesaler knows only the probability distribution of each retailer's characteristics. Perfect price discrimination is impossible because a separate pricing schedule cannot be tailored for each retailer. Some degree of discrimination is possible only by using a non-linear pricing schedule. From this analysis based on the non-linear pricing, we conclude that there is no Pareto superior pricing schedule for the case of multiple retailers.

• Journal of Distribution Research
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• v.17 no.4
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• pp.29-53
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• 2012

As so many marketers get to use diverse sales promotion methods, manufacturer and retailer in a channel often use them too. In this context, diverse issues on sales promotion management arise. One of them is the issue of unplanned buying. Consumers' unplanned buying is clearly better off for the retailer but not for manufacturer. This asymmetric influence of unplanned buying should be dealt with prudently because of its possibility of provocation of channel conflict. However, there have been scarce studies on the sales promotion management strategy considering the unplanned buying and its asymmetric effect on retailer and manufacturer. In this paper, we try to find a better way for a manufacturer in a channel to promote performance through the retailer's sales promotion efforts when there is potential of unplanned buying effect. We investigate via game-theoretic modeling what is the optimal cost sharing level between the manufacturer and retailer when there is unplanned buying effect. We investigated following issues about the topic as follows: (1) What structure of cost sharing mechanism should the manufacturer and retailer in a channel choose when unplanned buying effect is strong (or weak)? (2) How much payoff could the manufacturer and retailer in a channel get when unplanned buying effect is strong (or weak)? We focus on the impact of unplanned buying effect on the optimal cost sharing mechanism for sales promotions between a manufacturer and a retailer in a same channel. So we consider two players in the game, a manufacturer and a retailer who are interacting in a same distribution channel. The model is of complete information game type. In the model, the manufacturer is the Stackelberg leader and the retailer is the follower. Variables in the model are as following table. Manufacturer's objective function in the basic game is as follows: ${\Pi}={\Pi}_1+{\Pi}_2$, where, ${\Pi}_1=w_1(1+L-p_1)-{\psi}^2$, ${\Pi}_2=w_2(1-{\epsilon}L-p_2)$. And retailer's is as follows: ${\pi}={\pi}_1+{\pi}_2$, where, ${\pi}_1=(p_1-w_1)(1+L-p_1)-L(L-{\psi})+p_u(b+L-p_u)$, ${\pi}_2=(p_2-w_2)(1-{\epsilon}L-p_2)$. The model is of four stages in two periods. Stages of the game are as follows. (Stage 1) Manufacturer sets wholesale price of the first period($w_1$) and cost sharing level of channel sales promotion(${\Psi}$). (Stage 2) Retailer sets retail price of the focal brand($p_1$), the unplanned buying item($p_u$), and sales promotion level(L). (Stage 3) Manufacturer sets wholesale price of the second period($w_2$). (Stage 4) Retailer sets retail price of the second period($p_2$). Since the model is a kind of dynamic games, we try to find a subgame perfect equilibrium to derive some theoretical and managerial implications. In order to obtain the subgame perfect equilibrium, we use the backward induction method. In using backward induction approach, we solve the problems backward from stage 4 to stage 1. By completely knowing follower's optimal reaction to the leader's potential actions, we can fold the game tree backward. Equilibrium of each variable in the basic game is as following table. We conducted more analysis of additional game about diverse cost level of manufacturer. Manufacturer's objective function in the additional game is same with that of the basic game as follows: ${\Pi}={\Pi}_1+{\Pi}_2$, where, ${\Pi}_1=w_1(1+L-p_1)-{\psi}^2$, ${\Pi}_2=w_2(1-{\epsilon}L-p_2)$. But retailer's objective function is different from that of the basic game as follows: ${\pi}={\pi}_1+{\pi}_2$, where, ${\pi}_1=(p_1-w_1)(1+L-p_1)-L(L-{\psi})+(p_u-c)(b+L-p_u)$, ${\pi}_2=(p_2-w_2)(1-{\epsilon}L-p_2)$. Equilibrium of each variable in this additional game is as following table. Major findings of the current study are as follows: (1) As the unplanned buying effect gets stronger, manufacturer and retailer had better increase the cost for sales promotion. (2) As the unplanned buying effect gets stronger, manufacturer had better decrease the cost sharing portion of total cost for sales promotion. (3) Manufacturer's profit is increasing function of the unplanned buying effect. (4) All results of (1),(2),(3) are alleviated by the increase of retailer's procurement cost to acquire unplanned buying items. The authors discuss the implications of those results for the marketers in manufacturers or retailers. The current study firstly suggests some managerial implications for the manufacturer how to share the sales promotion cost with the retailer in a channel to the high or low level of the consumers' unplanned buying potential.

• Journal of Distribution Science
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• v.12 no.2
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• pp.73-79
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• 2014

Purpose - The Korean government has revised the distribution industry development law to regulate large-scale retailer operations to protecting medium- and small-scale retailers and traditional markets. According to the revised law, large-scale retailers must follow regulations on operating hours and compulsory store closures two days per month. Based on the revised distribution industry development law, most local governments regulate operation hours and they have adopted compulsory closure programs for large-scale retail stores. However, it is argued that fresh food producers suffer from a decrease in sales based on the compulsory closure of stores operated by large-scale retailers. Large-scale retailers reduce their fresh food orders from agricultural and fishery producers because of the compulsory store closures. Fresh food producers also suffer from a decrease in prices because reduced orders lead to a decrease in auction prices based on the availability of excess goods in wholesale markets. This paper investigates the effects of operation regulations for large-scale retailers on agricultural producers by surveying agricultural and fishery producer organizations. Research design, data, methodology - A survey was conducted on 117 producer organizations of fruits and vegetables, cereals, fisheries, and livestock products from September 10 to October 4, 2012. Survey items are annual sales, shares of sales accounted for by large-scale retailers, reduction of orders and prices from large-scale retailers, methods to deal with the sales reduction, unfair trade practices of large-scale retailers, opinion of the large-scale retailer regulations, and so on. The average sales of the sampled producer organizations are 13.7 billion won and the average share of sales accounted for by large-scale retailers is 35.4%. Results - Survey results show that the sample producer organizations' sales decreased 10.1% because of the compulsory closures of stores operated by large-scale retailers. It is estimated that the total sales of producer organizations decreased 371.2 billion won because of the regulations on the operation of large-scale retailers. In addition to the direct effect of a sales decrease due to order reduction, agricultural and fishery producer organizations suffered from the secondary effect of price reduction in wholesale markets. When orders from large-scale retailers decreased, most agricultural and fishery producer organizations shipped redundant products to wholesale markets, decreasing auction prices. It was estimated that the price received decreased 21.9% when sold in other marketing channels. As producer organization sales decreased, it was reported that the labor force employed by producer organizations also decreased by 15.1%. Therefore, we can conclude that the regulations for large-scale retailer operations resulted in negative impacts on agricultural producers. Conclusions - Although the sales reduction due to the regulations for large-scale retailer operations are not great, the cumulative effects due to the continued compulsory closure of stores operated by large-scale retailers could be great. This paper suggests governmental programs that could help agricultural producer organizations to find new and effective marketing channels such as direct marketing, farmers' markets, exports, Internet shopping, and so on.

• Journal of Korean Society of Industrial and Systems Engineering
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• v.46 no.2
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• pp.109-115
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• 2023

This paper studied the problem of determining the optimal inventory level to meet the customer service target level in a situation where the customer demand for each branch of a nationwide retailer is uncertain. To this end, ISR (In-Stock Ratio) was defined as a key management indicator (KPI) that can be used from the perspective of a nationwide retailer such as Samsung, LG, or Apple that sells goods at branches nationwide. An optimization model was established to allow the retailer to minimize the total amount of inventory held at each branch while meeting the customer service target level defined as the average ISR. This paper proves that there is always an optimal solution in the model and expresses the optimal solution in a generalized form using the Karush-Kuhn-Tucker condition regardless of the shape of the probability distribution of customer demand. In addition, this paper studied the case where customer demand follows a specific probability distribution such as a normal distribution, and an expression representing the optimal inventory level for this case was derived.

• Journal of Korean Society of Industrial and Systems Engineering
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• v.18 no.34
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• pp.193-204
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• 1995

Many studies show that the value of the warehouse is good. However, studies explicitly mention the tradeoff between costs of operating the warehouse and benefits from the warehouse. Also, it is important to know when the benefits overcome the costs. We study a one-warehouse/N-retailer(s,Q) distribution system with stochastic lead times in order to answer two questions: "What are the optimal policies of the system that minimizes total system costs\ulcorner" and given the optimal policies, "Is the value of the warehouse always good\ulcorner" We use an analytical model for answering the questions. We find that the optimal policies are different from those with deterministic lead times. In fact it is reverse. We alse find the existence of the breakeven point beyond which the benefits starts overcomming the costs. And, we show that one of the breakeven points is the mean ratio of a supplier's lead time to transportation lead time between the warehouse and the retailer. Finally, we show that the breakeven point is sensitive to the ratio of holding costs of the warehouse and the retailer and it is also sensitive to the unit backorder costs at the retailer.sts at the retailer.