Today in the last class meeting of this course, we talked about the coordination of retailer and warehouse inventories in order to achieve overall optimality. That reminds me of a talk a short while ago about the coordination between suppliers and customers. But that paper concludes that the overall optimal strategy benefits the supplier but may hurt the customer. The supplier should compensate the extra cost incurred at the customer to encourage coordination.
I believe there is the same problem to multi-echlon inventory managments although this might be under the unified financial administration of the same company. The warehouse management should take actions to encourage the retailer to coordinate for a win-win strategy.
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