Quick Response Retailer Impact

Consider the quick response (QR) approach. Under this scheme, the manufacturer has to receive the order only four months in advance. The retailer can collect data regarding sales of similar products at points closer to the upcoming season before placing an order. Intuitively, the ability to order closer to the season increases the possibility that more recent trend information or economic conditions can be used to better forecast demand. For this example, assume that data regarding demand for similar product enables the retailer to further refine the demand distribution estimates. What will be the impact of QRoii the retailer (For now, assume manufacturer prices remain the same.) 

the observed demand changes the conditional weights (last column above) placed on each of the two demand distributions. As before, we can then derive the optimal inventory policy and associated expected profit for the retailer as follows  

the retailers profit increases from 216 to 262.80, an increase of 22%. 

What is the expected quantity purchased from the manufacturer under QR  

It is clear that since the retailer-expected profits increase while the manufacturer revenues decrease, manufacturer profits decrease (if costs were to remain the same). Thus QR is not Pareto improving without coordination agreements. This su ests the need for agreements between the manufacturer and the retailer to implement QR. 

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In the US the quick response initiative in the apparel industry has linked retailers to garment manufacturers and also to the fabric producers through shared information. The impact of this collaboration has been a significant improvement in the competitiveness of that industry. 

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