A theory of intermediation in supply chains based on inventory control

Arbeitspapier

The paper shows that taking inventory control out of the hands of retailers and assigning it to an intermediary increases the value of a supply chain when demand volatility is high. This is because an intermediary can help solve two incentive problems associated with retailers' inventory control and thereby improve the intertemporal allocation of inventory. Adding an intermediary as a new link in a supply chain is also shown to reduce total inventory, to make shipments from the manufacturer less frequent and more variable in size, as well as to reduce social welfare.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CEPIE Working Paper ; No. 09/16

Classification and Topics

• Classification: Wirtschaft ; Production, Pricing, and Market Structure; Size Distribution of Firms ; Monopoly; Monopolization Strategies ; Firm Organization and Market Structure ; Retail and Wholesale Trade; e-Commerce
• Subject: Intermediation ; Inventory ; Demand Volatility ; Supply Chain

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Qu, Zhan ; Raff, Horst ; Schmitt, Nicolas
• Event: Veröffentlichung
• (who): Technische Universität Dresden, Center of Public and International Economics (CEPIE)
• (where): Dresden
• (when): 2016

Further information

• Handle: http://hdl.handle.net/10419/147252
• URN: urn:nbn:de:bsz:14-qucosa-212009
• Last update: 10.03.2025, 11:45 AM CET