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Sale price decision in the supply chain of one product family with linear price-dependent demand

Sale price decision in the supply chain of one product family with linear price-dependent demand In response to different customer preferences, manufacturers add numerous product variants to compose one product family. Some components in one product family can be shared for time and cost reduction. The paper provides mathematical models for the sale price decision in the multistage supply chain of one product family under the stochastic and price-dependent demand environment. With proposed models and one specific case, the paper studies how different decision-making leaders including the manufacturer, the retailer or both with negotiation on the profit sharing rate, how different linear price-demand functions and how component commonality affect the sale price decision and the supply chain performance in profit. Results show that the quality of price-dependent demand information available at the decision maker has a significant impact on the supply chain performance in profit. Procedure cost reduces and quantity discount of sharing components could benefit the retailer, the manufacturer and customers. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Services Operations and Informatics Inderscience Publishers

Sale price decision in the supply chain of one product family with linear price-dependent demand

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Publisher
Inderscience Publishers
Copyright
Copyright © Inderscience Enterprises Ltd. All rights reserved
ISSN
1741-539X
eISSN
1741-5403
DOI
10.1504/IJSOI.2008.021344
Publisher site
See Article on Publisher Site

Abstract

In response to different customer preferences, manufacturers add numerous product variants to compose one product family. Some components in one product family can be shared for time and cost reduction. The paper provides mathematical models for the sale price decision in the multistage supply chain of one product family under the stochastic and price-dependent demand environment. With proposed models and one specific case, the paper studies how different decision-making leaders including the manufacturer, the retailer or both with negotiation on the profit sharing rate, how different linear price-demand functions and how component commonality affect the sale price decision and the supply chain performance in profit. Results show that the quality of price-dependent demand information available at the decision maker has a significant impact on the supply chain performance in profit. Procedure cost reduces and quantity discount of sharing components could benefit the retailer, the manufacturer and customers.

Journal

International Journal of Services Operations and InformaticsInderscience Publishers

Published: Jan 1, 2008

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