If demand is uncertain,a manufacturer can incentivize retailers to provide high levels of product availability by using
A)high fixed costs.
B)buyback contracts.
C)low fixed costs.
D)zero-cost contracts.

Question

Quizplus · Accepted Answer

Buyback contracts can incentivize retailers to maintain high levels of product availability as the manufacturer offers to buy back any unsold inventory. This reduces risk for the retailer and encourages them to make the investment in stocking the product. High fixed costs may not necessarily incentivize retailers to maintain high levels of availability, while low fixed costs and zero-cost contracts do not provide any direct incentive for the retailer to maintain inventory levels.

If Demand Is Uncertain,a Manufacturer Can Incentivize Retailers to Provide