Integrated inventory models considering the two-level trade credit policy and a price-negotiation scheme

Coordinating supplier retailer and carrier with price discount policy

External factors such as improper handling, extreme weather and insect attacks affect product quality. It is most obvious in fruit products which have a high deterioration rate. Moreover, decaying fruits will increase the deteriorating of other good ones. The purpose of this study is to derive the optimal pricing and replenishment decisions for agricultural products considering the effect of external factors that induce deterioration.,In this paper, the study investigates ways to reduce the product deterioration rate by separating the near defective items from the other good products and accelerating the quick sales of the near defective items at a discounted price. The objective is to maximize the total profit by optimizing the selling price and the replenishment cycles. Two scenarios are investigated. In the first scenario, the retailer offers a selling price discount for near defective products to stimulate customer demand. In the second scenario, the retailer does not offer such discounts.,An algorithm to solve the model is derived. Further, numerical examples are developed to compare the total profit for the two scenarios. Theoretical derivations and graphical results show the concavity of the profit function. Finally, the sensitivity analysis shows that the total profit of the discount model is higher.,This study contributes to a new pricing and inventory decision model. The research provides insights to retailers on making optimal pricing and replenishment decisions for non-instantaneous deterioration items, as well as reducing the external factors that influence higher deterioration rate through separating good products from the near defective ones which are sold at a discount to induce the sale.

A non-instantaneous inventory model of agricultural products considering deteriorating impacts and pricing policies

Background/Objectives: The objective of the work carried out in this paper is to present the literature based on different Supply Chain (SC) coordination mechanisms Also, it is intended to explore various coordination models proposed by various researchers from the literature Methods/Statistical Analysis: The literature is reviewed by considering 142 articles published from 2000 to till date and classified as two-level models and three-level models All these articles are further discussed based on few coordination mechanisms such as trade credit, quantity discounts, revenue sharing contract and information sharing In addition, the literature is reviewed on Vendor Managed Inventory and price dependent demand variations and the coordination issues are discussed Findings: From the findings of this research, it is observed that sufficient volume of papers reported the coordination mechanism in a two-level SC The number of papers discussing three-level SC coordination is few in number Especially, in the perspective of trade credit and quantity discount option, very few articles are reported discussing coordination in a three-level SC Further, it is also found that most of the articles addressed the coordination mechanism incorporating ordering and carrying costs Very few articles addressed the implications of transportation cost in SC coordination mechanism Application/Improvement: From the outcomes of this work, it is observed that study of the effect of space cost and advertisement cost on SC performance is highly significant The use of simulation is highly emphasized as the activities of SC are becoming highly dynamic and challenging with the ever growing global competition

Supply Chain Coordination Models: A Literature Review

In the present-day scenario of global competitive environment, the consideration of the elasticity of demand has become one of the significant factors for designing effective supply chain coordination. In this paper, an integrated inventory model for optimal lot sizing and inventory decisions for centralised and decentralised supply chain with a single customer and single supplier considering ordering/setup costs, carrying costs and transportation costs of respective entities has been developed. The main contribution of this work is to demonstrate the implications of a dependence factor over the optimality of inventory levels, number of shipments and the total variable costs under price dependent demand which in turn is a function of replenishment quantity with dependence factor. A computer program is written in MATLAB as per the solution procedure developed to solve the model. Numerical example is devised to illustrate the optimality of decision variables, and objective function and also the sensitivity analysis is carried out.

Optimal lot sizing and inventory decisions in a centralised and decentralised two echelon inventory system with price dependent demand

Pricing policy of an enterprise has great influenced the development of a supply chain coordination strategy. The joint decision policy characterized by the selling price, order quantity and replenishment schedule is coordinated through pricing discount. The major aim of this study is to develop an optimum replenishment and pricing policy by maximizing the supplier, manufacturer and retailer's shared profit in a price-sensitive demand with reciprocal collaboration. This study develops a mathematic supply chain inventory model that concurrently decides the discount price, the number of deliveries and the ordering cycle time with linearly declining price dependent demand under different profit-sharing ratios. A numerical example explicates the theory with different profit-sharing ratios and negotiation factors.

Hui-Ming Wee

Papers

Pricing discount for a supply chain coordination policy with price dependent demand