A manufacturer’s production and pricing strategies with a salvage channel
研究了制造商在销售季末通过清仓渠道处理剩余库存时，如何决定生产数量和定价策略，分析了不同清仓渠道结构对最优决策和利润的影响。
We study a manufacturer’s production quantity and pricing decisions when the manufacturer has an opportunity to sell surplus inventory through a salvage channel. Before sales begin, the manufacturer determines the production quantity without knowing customer demand. After demand is realised, the manufacturer first satisfies the demand through primary channel while charging a fixed price or adjusting price to maximise profit. At the end of the selling season, the manufacturer resells surplus inventory through the salvage channel, which can be either integrated with or independent of the manufacturer. The manufacturer’s optimal production quantity and expected profit are investigated under different salvage channel structures. We show that the salvage channel improves the manufacturer’s profitability as well as the availability of the product to potential customers through both primary and salvage channels.