Session13handout

Session13handout - Supply Chain Modeling...

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Supply Chain Modeling Session 13: Video Vault Atalay Atasu
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Last Class … Explored the buyback contracts which are commonly  used in publishing, computer hardware and software,  pharmaceuticals and other industries. Showed that buyback contracts can coordinate the  supply chain and can be used to signal demand and  quality What are the drawbacks? Handling returns may be costly Retailer may dedicate more effort to sell other substitutable  products and less on the products with return policies Therefore, there are costs and benefits associated  with buyback contracts
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Theme of Today’s Class Will continue to explore other ways of  coordinating the supply chains Hollywood: video rentals and sales  $ 20B  business, and largest source of revenue Rentals slipping Competition from direct services Customer dissatisfaction (20% cannot rent  video they want on a typical trip) What’s the problem? Bad forecasting?  Inefficient replenishment?
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Objective of Today’s Class Explore the video rental industry Introduce Revenue Sharing Contracts  Benefits of revenue sharing Implementation issues and drawbacks Demonstrate that contracts can have dramatic effect on the  performance of supply chains Understand how the performance of supply chains can be  improved by making contracts observable and contractible. Briefly introduce some other commonly used contracts Franchise Fee Slotting Allowances Quantity Flexibility Options Contracts Quantity Discounts
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What Differentiates Video Vault from a Video Rental Chain? Independent Store  (e.g. Video Vault) Video Rental Chain (e.g. Blockbuster) Owner and employees really know  their movies Cater to older generation Cater to younger generation Good at suggesting alternatives Employees usually uninformed and  not helpful Better for renting older movies than  the latest releases. Likely to stock-out on new releases Carry many copies of the new  releases Customers often want to rent  a movie Customers often want to rent  the  movie
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Do you think independent stores will survive? Ind. Stores and Chains cater to two very different segments  Video rental chains pull demand Independent stores push demand If you were managing Video Vault, how many copies  of Heist, A.I., and Zoolander would you stock? Assume the expected demand in the first three weeks after  release is 10 copies for category A title. Stock less than, more than, or exactly 10 copies?
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This note was uploaded on 01/25/2011 for the course MGT 4366 taught by Professor Hora during the Spring '10 term at Georgia Tech.

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Session13handout - Supply Chain Modeling...

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