Supply chain single vendor – Single buyer inventory model with price-dependent demand
Abstract: The aim of this
article is developing an integrated production-inventory-marketing model for a
two-stage supply chain. The demand rate is considered as the Iso-elastic decreasing
function of the selling price. The main
research goal of the article is to obtain the optimal values of the selling
price, order quantity and number of shipments for the proposed model under
independent and also joint optimization. In addition, the effects of the
model’s parameters on the optimal solution are investigated.
Design/methodology/approach: Mathematical modeling is used to obtain the
joint total profit function of the supply chain. Then, the iterative solution
algorithm is presented to solve the model and determine the optimal solution.
Findings and Originality/value: It is observed that under joint
optimization, the demand rate and the supply chain’s profit are higher than
their values under independent optimization, especially for the more price
sensitive demand. Therefore, coordination between the buyer and the vendor is
advantageous for the supply chain. On
the other hand, joint optimization will be less beneficial when there isn’t a
significant difference between the buyer’s and the vendor’s holding costs.
Originality/value: The contribution of the article is determining the
ordering and pricing policy jointly in the supply chain, which contains one
vendor and one buyer while the demand rate is the Iso-elastic function of the
selling price.
Author: Mona Ahmadi Rad, Farid
Khoshalhan, Mostafa Setak
Journal Code: jptindustrigg140024
