Contract preference for the dominant supplier subject to inventory inaccuracy Abstract   Inventory inaccuracy is usually inevitable, and affects decision making. This paper investigates the operational decisions and contract preference in a supply chain with one supplier and two competing retailers that are subject to inventory inaccuracy. The supplier, acting as the Stackelberg leader, first decides the contract format and pricing policy. The two retailers are followers, which make their decisions simultaneously. We establish a newsvendor model to derive the equilibrium solutions analytically under the buyback contract, consignment contract and hybrid contract scenarios. Then we conduct a numerical study to illustrate the impact of inventory inaccuracy on the supplier chain membersxe2x80x99 operational policy and the dominant supplierxe2x80x99s contract preference. The results show that inventory inaccuracy plays an important role in determining the retailersxe2x80x99 equilibrium order quantities and retail prices, and the supplierxe2x80x99s wholesale (consignment) price. In particular, one retailer is better off (worse off) if the other who adopts the consignment (buyback) contract improves the inventory availability. Importantly, inventory inaccuracy affects the supplierxe2x80x99s contracting strategy. If the inventory availability changes, then the optimal contract selection may, accordingly, be changed. The conclusions reveal that although inventory inaccuracy is assumed to have occurred on the retailerxe2x80x99s side, both the retailer and the supplier are greatly influenced by the inventory inaccuracy. Therefore, the supplier should fully consider inventory availability and retail competition before determining the contract format. The retailer should improve his inventory availability to enhance competitiveness, to receive a more profitable contract format from the supplier.

Supply Process Improvement Decisions for a Newsvendor with Random Capacity Abstract   This paper considers a firm with random capacity that makes decisions on supply process improvement in a newsvendor setting. We find that the firm benefits from increased mean capacity, from reduced variance in capacity, and from monotonicity in the increasing concave order of capacity, despite diminishing returns. Moreover, we identify positive moderating effects on process improvements of profit margin and demand magnitude. When the capacity follows specific distributions whose mean and variance are jointly parameterized, we investigate comparative statics via analytical derivation and numerical experiments. The results are consistent with those obtained under a general distribution, where process improvement is more effective when initiated earlier rather than later. Analyzing various capacity distributions reveals that the random capacityu0027s optimal parameters related to its mean increase with the firmu0027s profit margin. However, the associations between these parameters and demand variability are subtle and may change under different procurement costs. The capacityu0027s optimal parameters related to its variance decrease with higher profit margins but increase with greater demand variability. Our findings yield several managerial insights.