This paper studies a supply contracting problem where a buyer sources a product from a supplier to satisfy uncertain market demand. With the increasing length and complexity of today's global supply chains, the buyer may face two issues when designing the supply contract: adverse selection...

This paper models a type of vendor-managed inventory (VMI) agreement that occurs in practice called a (z, Z) contract. We investigate the savings due to better coordination of production and delivery facilitated by such an agreement. The optimal behavior of both the supplier and the retailer are...