Two-echelon Supply Chain Considering Multiple Retailers with Price and Promotional Effort Sensitive Non-linear Demand

This study deals with the effects of a supply chain (SC) with single product, multiple retailers and a manufacturer, where the manufacturer(he) produces lotsize of the product that contains a random portion of imperfect quality item. The imperfect quality products are sold in a secondary shop. The new contribution of this paper is a new non-linear demand function. Demand of the end customers varies with pricing and promotional effort of the rivalry amongst the retailers which can be used for the electronic goods, new lunched products, etc. We investigate the behavior of the supply chain under Manufacturer-Stackelberg(MS), and Retailer-Stackelberg(RS) model structures. The nature of the mentioned models provides great insights to a firm’s manager for achieving optimal strategy in a competitive marketing system. Within the framework of any bilevel decision problem, a leader's decision is influenced by the reaction of his followers. In MS model structure, following the method of replacing the lower level problem with its Kuhn-Tucker optimality condition, we transform the nonlinear bilevel programming problem into a nonlinear programming problem with the complementary slackness constraint condition. The objective of this paper is to determine the optimal selling price and promotional effort of each retailer, while the optimal wholesale price of the perfect quality products are determined by the manufacturer so that the above strategies are maximized. Finally, numerical examples with sensitivity analysis of the key parameters are illustrated to investigate the proposed model

Supply chain contracting coordination for fresh products with fresh-keeping effort

Purpose – Fresh product loss rates in supply chain operations are particularly high due to the nature of perishable products. This paper aims to maximize profit through the contract between retailer and supplier. The optimized prices for the retailer and the supplier, taking the fresh-keeping effort into consideration, are derived. Design/methodology/approach – To address this issue, we consider a two-echelon supply chain consisting of a retailer and a supplier (i.e., wholesaler) for two scenarios: centralized and decentralized decision-making. We start from investigating the optimal decision in the centralized supply chain and then comparing the results with those of the decentralized decision. Meanwhile, a fresh-keeping cost-sharing contract and a fresh-keeping cost- and revenue-sharing contract are designed. Numerical examples are provided, and managerial insights are discussed at end. Findings – The results show that (a) the centralized decision is more profitable than the decentralized decision; (b) a fresh product supply chain can only be coordinated through a fresh-keeping cost- and revenue-sharing contract; (c) the optimal retail price, wholesale price and fresh-keeping effort can all be achieved; (d) the profit of a fresh product supply chain is positively related to consumers’ sensitivity to freshness and negatively correlated with their sensitivity to price. Originality/value – Few studies have considered fresh-keeping effort as a decision variable in the modelling of supply chain. In this paper, a mathematical model for the fresh-keeping effort and for price decisions in a supply chain is developed. In particular, fresh-keeping cost sharing contract and revenue-sharing contract are examined simultaneously in the study of the supply chain coordination problem

Optimal sustainability efforts and pricing policies in a two-echelon supply chain

Stakeholders such as governments, NGOs and customers have made businesses to consider sustainable practices in their operations. Achieving sustainability goals, such as for e.g. carbon emissions reduction often requires coordinated efforts between firms across different echelons in supply chains. This paper aims to study this issue of sustainability efforts by firms in a two-echelon supply chain where pricing decisions are also in mix along with emission reduction policy decisions. We consider a channel in which a manufacturer sells through a retailer where retailer is the dominant firm. Both the firms can put efforts to reduce their respective emission levels. We model a Stackelberg game where retailer as the leader determines its retail price (margin) and its emission reduction efforts and the manufacturer responds by determining its wholesale price and its emission reduction effort. The consumer demand is sensitive to retail price as well as total supply chain wide emissions. We also solve the problem of a centralized decision maker which serves as a benchmark solution. We obtain optimal equilibrium policies and obtain useful managerial insights both through analytical as well as numerical means including the sensitivity of optimal decision variables w.r.t. various exogenous model parameters. We find that in the centralized channel the overall sustainability efforts are higher and in addition the consumers also pay a lower retail price in the centralized channel compared to a decentralized one

Dynamic Pricing for Managing Product Selling on Fruit Supply Chain Management

Recently fresh fruit sector is grown not only due to increasing of demand that spirited by healthy lifestyle but also requirement of quality food should be eaten daily. Its complexity make many research considered fruit in certain supply chain, called as Fruit Supply Chain (FSC). In FSC, customers tend to purchase products with a longer remaining lifetime and avoid the ones which give aging signal. Customer willingness to pay decreases once the product start to be deteriorated, which may cause slower demand for aging fruits. Consequently, retailers should enable discounted price for aging fruits products to retain or improve demand rate. Hence, a solution of this is creating price that dynamically following the condition of goods. This research establishes pricing scheme, which is dynamic pricing to FSC. Main purpose of this research is explaining how to maximize supply chain profit by applying dynamic pricing. Remind that there is deterioration that does exist on FSC product and its customer preferences, dynamic pricing will be close to the real life particularly applied by FSC players. A set of mathematical model is optimized on this research. It addresses dynamic pricing for FSC players to achieve better profitability. The result proves that dynamic pricing is urgent to be done. In order to avoid unsold product due to became deteriorated, FSC players can separate selling period into three periods, which are forward buying period, normal price period, and markdown price period. Moreover, there are several parameters involved on optimization has different impact on FSC profitability, where it should be thoroughly focused on by FSC players collaboratively

Two echelon inventory models with the market price, advertisement, and discount sensitive demand in the non-co-operative environment

In supply chain management manufacturers and retailers are the two most important nodes. Some decision variables are decided by the manufacturer and some are decided by the retailer to maximize their profits. In this work, market demand is considered sensitive to market price, advertising, and discount given by the manufacturer to the retailer. In this work, EOQ and advertising will be decided by the retailer and a discount will be given by the manufacturer to the retailer to motivate the retailer to generate more market demand. Manufacturers' and retailers' profit models are developed in the non-co-operative environment. Models are verified using dummy data, and sensitivity analysis is performed for all the decision variables for both manufacture and retailer Stackelberg models

The influence of promotional activity on supply chain stability: a fast moving consumer goods (FMCG) perspective.

Master of Commerce. University of KwaZulu-Natal, Pietermaritzburg, 2014.Today, most sales are stimulated at the point of purchase, so sales promotions are becoming a crucial element of any marketing campaign. The consequence of these promotions is the creation of unpredictable demand. The resultant instability has been termed the “Bullwhip Effect” (BWE). The BWE has a negative effect on business performance as it creates information distortions that cause excessive inventory holdings, higher overall costs, poor customer service and lost sales. An important strategy to achieve a smooth flowing supply chain is to mitigate or preferably eliminate the BWE. The aim of this research was to monitor the stock levels of a high value product flowing through the supply chain to determine whether marketing activities, such as promotions, contribute to increased instability in the chain. The study followed a case study approach and analysed the business activities of consumer packaged goods company (CPGC) “X” promoting their product “X”, an item of high value, with retailer “X”. The promotion was monitored in three phases. The phases included pre-promotion planning, execution of the promotion and post promotion analysis. The researcher employed both qualitative and quantitative research methods. The research established that the ROI on the promotion was greater than the target and that the retailer made an additional profit. However, when the assessment of ROI included more of the supply chain, there was a negative operating profit due to excess upstream inventory. The study confirmed that promotional activities contribute to the BWE and that this effect may be more pronounced with products of higher value. The phenomenon worsened as the distance of supply chain nodes from the real demand increased. This caused a major shift in ordering patterns and an altered total inventory pipe fill in the chain. The recommendations arising from this study are that the CPGC and retailer should implement a true scorecard and a joint business plan for those brands that have products of high value. Subsequently, a vendor managed inventory (VMI) system should be implemented. This will remove the retailer’s need to forecast and may prevent unstable ordering and delays due to cost avoidance. Shrinkage will be reduced as the CPGC would directly own, control and supply stock in the retailer’s DCs

Game Theoretic Analysis of Carbon Emission Reduction and Sales Promotion in Dyadic Supply Chain in Presence of Consumers’ Low-Carbon Awareness

The paper studies how the combination of the manufacturer’s carbon emission reduction and the retailer’s emission reduction relevant promotion impacts the performances of a dyadic supply chain in low-carbon environment. We consider three typical scenarios, that is, centralized and decentralized without or with side-payment. We compare measures of supply chain performances, such as profitabilities, emission reduction efficiencies, and effectiveness, in these scenarios. To improve chain-wide performances, a new side-payment contract is designed to coordinate the supply chain and numerical experiments are also conducted. We find the following. (1) In decentralized setting, the retailer will provide emission cutting allowance to the manufacturer only if their unit product profit margin is higher enough than the manufacturer’s, and the emission reduction level of per unit product is a monotonically increasing function with respect to the cost pooling proportion provided by the retailer; (2) the new side-payment contract can coordinate the dyadic supply chain successfully due to its integrating sales promotion effort and emission reduction input, which results in system pareto optimality under decentralized individual rationality but achieves a collective rationality effect in the centralized setting; (3) when without external force’s regulation, consumers’ low-carbon awareness is to enhance consumers’ utility and decrease profits of supply chain firms