Supply channel coordination in a newsvendor model with two allocation quotas

the motivation for this paper arises from an article written by jianli li and liwen liu [1] in 2007, extending the classical newsvendor model to a supply chain where the dealer, after depletion of an initial order, is given the option of a second order within an allocation quota prescribed and conditioned by the manufacturer. the paper analyzes coordination of the channel in order to improve the expected benefits of the system. this paper extends the model to allow the newsvendor a second allocation quota at the end of the period, under similar conditions. the possibilities and incentives for channel coordination are studied.