This paper develops a newsboy problem with option contract and partial backorders. In this option contact policy, if the demand exceeds the order quantity, the retailer may have a second replenishment opportunity to order an option quantity from the manufacturer in order to fulfil its...

The problem of establishing efficiency in a manufacturer–retailer channel (channel coordination) is extensively discussed in the industrial economics, the marketing and the operations research literature. However, studies considering consumer demand to be simultaneously affected by price and...