Which contracts result in the supply chain producing retailer orders rather than actual consumer demand?

Question

Quizplus · Accepted Answer

Both buyback or returns contracts and revenue-sharing contracts incentivize retailers to order more from the supply chain without considering actual consumer demand. Buyback or returns contracts allow the retailer to return unsold products to the supplier, while revenue-sharing contracts give the retailer a percentage of the revenue generated from the sale of the product, creating an incentive to order as much as possible. Quantity flexibility contracts, on the other hand, give the retailer the option to order more or less depending on actual consumer demand.

Which Contracts Result in the Supply Chain Producing Retailer Orders