Refer to Example 2 in Part 1 of the Module lecture document. Instead of the buy-back contract, think of a contract wherein the retailer agrees to order more from the manufacturer if the manufacturer reduces the price of the product. To compensate for the price reduction, the retailer agrees to share a portion of his revenue with the manufacturer. This is called the revenue-sharing contract. Discuss the potential advantages and disadvantages of such a contract to the manufacturer and the retailer.
Refer to Example 2 in Part 2 of the Module lecture document. Instead of the pay-back contract, think of a contract wherein the manufacturer agrees to produce more if the retailer agrees to pay a portion of the manufacturer’s production cost. To compensate for this additional cost to the retailer, the manufacturer agrees to lower the price of the product. This is called the cost-sharing contract. Discuss the potential advantages and disadvantages of such a contract to the manufacturer and the retailer.
Answer questions 7, 9b, 9c, 10a, 10b and 10c from the Discussion Questions section of Chapter 4 in the textbook.
Refer to Appendix C on pg. 480 of your textbook for supplemental information to assist you with this assignment.
Continue to work with your groups to identify the appropriate production strategy and contracts for the supply chain. Be aware that multiple strategies may be employed. If more than one strategy is used, be sure to discuss when the contract approach is used and why. Write a summary of your findings in the group discussion.
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