Care must be taken in extending the formulation and solution methodology of Federgruen and Zheng (1992) to include a stockout cost of a different dimensionality: $/unit, rather than $/unit/year. Federgruen and Zheng formulate this extended model for Poisson demand. We modify their formulation to...

The paper studies coordination of a supply chain when the inventory is managed by the vendor (VMI). We also provide a general mathematical framework that can be used to analyze contracts under both retailer managed inventory (RMI) and VMI. Using a simple news-vendor scenario with a single vendor...