In this paper, we analyze the impact of two forms of commonly used threshold-based incentive schemes on the observed sales variability. The first form of the incentive comprises an additional marginal payment on crossing a specified sales threshold and the second form of the incentive scheme...

Problem definition: We study the combined value of partial demand visibility and flexible capacity, two hedging mechanisms against demand uncertainty, when signing capacity contracts with temporal commitment. Academic/Practical Relevance: With new technological innovations, short commitment...