Allocation of Decision Rights and Inventory Ownership in Retail Supply Chains

26 Pages Posted: 2 Aug 2009 Last revised: 23 Nov 2012

See all articles by Mumin Kurtulus

Mumin Kurtulus

Vanderbilt University - Operations Management

Sezer Ulku

Georgetown University McDonough School of Business; Georgetown University - Robert Emmett McDonough School of Business

Date Written: July 13, 2009

Abstract

Motivated by the contrasting strategic choices made by two divisions of 7-Eleven regarding the risk ownership of excess inventory, our research aims to understand the drivers of the choice between consignment and retail ownership of inventory and to develop rules of thumb for determining what the right mode of operation is for different operating environments. To this end, we build a two-stage supply chain model with one retailer and one supplier, where the two parties differ in their forecasting capabilities. We investigate how power structure, differences in forecasting capabilities, product and store characteristics affect the choice of the mode of operation. Our results have several implications regarding inventory ownership in supply chains.

Keywords: Decision rights, inventory ownership, consignment inventory, asymmetric informa tion, retail operations

Suggested Citation

Kurtulus, Mumin and Ulku, Sezer, Allocation of Decision Rights and Inventory Ownership in Retail Supply Chains (July 13, 2009). Available at SSRN: https://ssrn.com/abstract=1442029 or http://dx.doi.org/10.2139/ssrn.1442029

Mumin Kurtulus

Vanderbilt University - Operations Management ( email )

Nashville, TN 37203
United States

Sezer Ulku (Contact Author)

Georgetown University McDonough School of Business ( email )

Washington, DC 20057
United States

Georgetown University - Robert Emmett McDonough School of Business ( email )

3700 O Street, NW
Washington, DC 20057
United States

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