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One stems from a lack of coordination between production and marketing, which leads to revenue loss or excess inventory. The other is caused by lack of information when making these two decisions. That is, firms usually have to make decisions when market information is poor. We consider the joint effects of coordination and information when market demand becomes more variable in the sense of a specific mean preserving transformation. We have three main findings. First, when these two strategies are coordinated by the Headquarters (HQ) of the firm, the HQ uses pricing and inventory as two instruments to manage uncertainty...
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