A price-discount sharing contract with novel return policy for the dominant retailer

Retailing channels are increasingly being controlled by dominant retailers who have the >power= to dictate pricing and ordering policies to manufacturers. We construct a price-sensitive newsvendor model to determine optimal pricing and ordering policies where a linear Price-Discount Sharing (PDS) contract and a novel integrative return policy are used to help a dominant retailer obtain maximal profit. © 2013 Asian Network for Scientific Information.