scholarly journals Competition and cooperation models for dynamic pricing of perishable products in a two-echelon supply chain

2020 ◽  
Author(s):  
Zhenkai Lou ◽  
Xuming Lou ◽  
Fujun Hou
Keyword(s):  
Supply Chain ◽  
Dynamic Pricing ◽  
Optimal Pricing ◽  
Perishable Products ◽  
Sales Price ◽  
Competition And Cooperation ◽  
Optimal Pricing Strategy ◽  
Cycle Lengths ◽  
Total Profit ◽  
Finite Time Horizon

This paper considers a two-level supply chain involving a supplier and a retailer. The retailer sells perishable products to consumers over a finite time horizon, and the demand is driven by a price-and-utility function. First, we study the noncooperative problem, which is formulated by a Stackelberg model. It is shown that the optimal pricing strategy of the retailer is to reduce a constant amount on the price at the beginning of each stage. Second, we examine the cooperative problem, in which the supplier and the retailer jointly price the product. Maximum selling cycle lengths of the two situations are obtained by analyzing the reasonability of the sales price. We demonstrate that the selling cycle length is extended by cooperation. Moreover, we show that they lower the sales price in the cooperative case so as to maximize the total profit. Meanwhile, an allocation method is provided based on the proportion.

scholarly journals Chemical supply chain coordination based on technology level and lead-time considerations

2021 ◽  
Author(s):  
Atieh Fander ◽  
Saeed Yaghoubi ◽  
Javad Asl-Najafi
Keyword(s):  
Supply Chain ◽  
Lead Time ◽  
Supply Chain Coordination ◽  
Sensitivity Analyses ◽  
Market Demand ◽  
Deterioration Rate ◽  
Managerial Implications ◽  
Total Profit ◽  
Finite Time Horizon ◽  
Technology Level

The production and transportation of chemicals is a risky process with high-cost operations for members of the supply chain, where some of the materials deteriorate over time and deal with value-reduction challenges. This paper studies a two-stage hazardous chemicals supply chain with a supplier and a manufacturer in a finite time horizon with a constant deterioration rate for both sides. To prevent potential hazards and improve product quality, the manufacturer invests in risk reduction and quality improvement technologies that can also attract more market demand. Owing to the importance of time in the storage and production of chemical products, this study focuses on a novel lead-time based discount contract to coordinate the channel members. The contract seeks to maximize the total profit of the chain by determining the optimal lead-time and manufacturer's technology level. By doing so, the supplier provides high-quality products and the manufacturer's unit supplying cost reduces and can buy more chemicals from the supplier. On the other hand, the supplier will have more time to supply the product and its initial cost will be reduced. As a result, the profit of both sides increases simultaneously. Some numerical examples are applied to examine the applicability of the proposed models. Finally, several sensitivity analyses on the main parameters are conducted to extract some in-depth managerial implications.

Optimal pricing model for non-instantaneous deterioration items with price and freshness sensitive demand under the e-commerce environment in China

Kybernetes ◽  
2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Weihua Xu ◽  
Ketong Zhao ◽  
Yixuan Shi ◽  
Sun Bingzhen
Keyword(s):  
Dynamic Pricing ◽  
Decision Problems ◽  
Theoretical Research ◽  
Pricing Strategy ◽  
Optimal Pricing ◽  
Managerial Decision ◽  
Pricing Policy ◽  
Content Type ◽  
Demand Rate ◽  
Total Profit

Purpose The purpose of this paper is to focus on determining the optimal sales price for non-instantaneous deterioration items according to consideration of freshness and demand. Design/methodology/approach In this model, the authors have described the demand function which is dependent on price as well time. The products that the deterioration is considered as non-instantaneous have a determinate shelf life, and their demand rate will decrease over time after the beginning of the selling period. This paper depicts that the total profit of non-instantaneous deterioration items using the dynamic pricing strategy is higher than that using fixed pricing strategy. Findings Finally, to illustrate and validate the model, the authors have used some numerical examples. A new freshness function and the model to study pricing policy are developed as well applied to solve managerial decision problems. Originality/value This paper complements the lack of the existing theoretical research of pricing for non-instantaneous deterioration items under an e-commerce environment. A new freshness function and the model to study pricing policy are developed as well applied to solve managerial decision problems.

Supply Chain Competition with Information Sharing

2011 ◽  
Vol 486 ◽  
pp. 309-312
Author(s):  
Rong Yao He ◽  
Zhong Kai Xiong ◽  
Yu Xiong
Keyword(s):  
Supply Chain ◽  
Supply Chains ◽  
Information Sharing ◽  
Optimal Pricing ◽  
Market Demand ◽  
Pricing Policy ◽  
Supply Chain Competition ◽  
Demand Information ◽  
Total Profit

Given the case of two competing supply chains each consisting of one manufacturer and one retailer, we explore whether the retailers should share the market demand information they know with their manufacturers when the manufacturers do not know the same specific demand information. We also determine the optimal pricing policy and total profit for the retailers when each chain either shares or does not share market demand information. We find that sharing information is always more profitable for both retailer and supply chain.

scholarly journals Effective Pricing of Perishables for a More Sustainable Retail Food Market

2019 ◽  
Vol 11 (17) ◽  
pp. 4762
Author(s):  
Jaekwon Chung
Keyword(s):  
Dynamic Pricing ◽  
Food Industry ◽  
Consumer Demand ◽  
Optimal Pricing ◽  
Perishable Products ◽  
Expiration Date ◽  
Food Retailing ◽  
Food Retailers ◽  
Food Market ◽  
Retail Food

Developing effective ways to manage perishable foods is crucial for food retailers to survive in the highly competitive retail food industry. Due to the nature of perishability, it is necessary to find an effective selling strategy to reduce waste from unsold perishables. Prior studies have proposed using dynamic pricing to develop an optimal pricing structure that compensates the consumer for the loss of freshness as the expiration date approaches. However, these studies have not considered consumer demand that more consumers are likely to purchase units of perishable products with relatively more or fewer days before expiration. In addition, prior studies have not compared dynamic pricing to a “no discount” policy whereby a retailer only displays those perishables that have the fewest remaining days to expiration, keeping units with a longer time before expiration in a warehouse. The results of this study show the potential impacts of different pricing by considering these issues. This study provides new insights for retailers to manage perishable foods with small and large packages that improve the sustainability of food retailing.

The effect of full or partial pricing integration on supply chain management

2019 ◽  
Vol 53 (5) ◽  
pp. 1807-1817
Author(s):  
Neng-Hui Shih ◽  
Ming-Hung Shu ◽  
Chih-Hsiung Wang
Keyword(s):  
Supply Chain ◽  
Cost Model ◽  
Service Level ◽  
Chain Model ◽  
Control Cost ◽  
Integration Model ◽  
Optimal Service ◽  
Supply Chain Model ◽  
Optimal Pricing Strategy ◽  
Total Profit

A previous paper proposed a supply chain model, comprised of a retailer and manufacturer, in which the manufacturer uses product pricing to maximize the profit of the entire supply chain. The increased profits gained from integration are then shared among all the supply chain members. The optimal pricing strategy was shown to be “products on consignment” for sale. The present study extends this simple two-layer supply chain model to a more complicated three-layer model, in which the supply chain comprises not only the retailer and manufacturer, but also an intermediate distributor. In contrast to the previous model, the present model not only considers the role of the distributor, but also the effects of product nonconformance at each facility in the supply chain. The profit function of each facility in the supply chain is established, including the sales revenue, procurement cost, and quality control cost. The investment cost at the retailer to improve the service level is also considered. It is shown that the total profit of the supply chain is maximized when the retailer’s optimal service level is adopted, where this service level is adjusted in accordance with the distributor’s unit sale price. Furthermore, after price integration, the overall profit of the supply chain is found to equal the retailer’s profit. In other words, the total profit of the manufacturer and distributor is equal to zero. Numerical examples are given to illustrate the proposed pricing integration model under different quality environments. The results are contrasted with those obtained using a traditional pricing model, namely the “make up on cost’’ model. Overall, the present results show that the manufacturer is always the winner under partial price integration (i.e., only the retailer and distributor join the integration). Furthermore, partial integration is far less profitable for the retailer and distributor than full integration.

PRICING PERISHABLE PRODUCTS WITH COMPOUND POISSON DEMANDS

2011 ◽  
Vol 25 (3) ◽  
pp. 289-306 ◽  
Author(s):  
Pengfei Guo ◽  
Zhaotong Lian ◽  
Yulan Wang
Keyword(s):  
Dynamic Pricing ◽  
Sample Path ◽  
Compound Poisson Process ◽  
Optimal Pricing ◽  
Stochastic Comparison ◽  
Perishable Products ◽  
Sample Path Analysis ◽  
Compound Poisson ◽  
Comparison Approach ◽  
Poisson Demands

We consider the dynamic pricing problem of perishable products in a system with a constant production rate. Potential demands arrive according to a compound Poisson process, and are price-sensitive. We carry out the sample path analysis of the inventory process and by using level-crossing method, we derive its stationary distribution given a pricing function. Based on the distribution, we express the average profit function. By a stochastic comparison approach, we characterize the pricing strategy given different customers willingness-to-pay functions. Finally, we provide an approximation algorithm to calculate the optimal pricing function.

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