We consider the compensation design problem of a firm that hires a salesperson to exert effort to increase demand. We assume both demand and supply to be uncertain, with sales being the smaller of demand and supply, and assume that if demand exceeds supply then unmet demand is unobservable...

We study the impact of limited inventory on optimal salesforce compensation contracts. We use the framework of Oyer (2000), characterized by limited liability and rent sharing with the agent. A commonly invoked assumption in the inventory management literature is that the demand distribution...

We study a scenario in which a firm designs the compensation contract for a salesperson who exerts effort to increase the level of uncertain demand and, jointly, the firm also decides the level of inventory to be stocked. We use a newsvendor-type model in which actual sales depend on the...