Optimizing shipment, ordering and pricing policies in a two-stage supply chain with price-sensitive demand

In this paper we focus on a two-stage supply chain consisting of one vendor and one buyer. We develop an integrated production-inventory-marketing model to determine the relevant profit-maximizing decision variable values. The model proposed is based on the joint total profit of both the vendor and the buyer, and it finds out the optimal ordering, shipment and pricing policies. We are able to ascertain the optimal decision variable values employing an analytical solution procedure. The numerical evidence suggests that it is more beneficial for the buyer and the vendor to cooperate with each other when the demand is more price sensitive.Joint economic lot sizing Vendor-buyer coordination Shipment policy Pricing policy

An integrated vendor-buyer model with stock-dependent demand

We develop an integrated vendor-buyer model for a two-stage supply chain. The vendor manufactures the product and delivers it in a number of equal-sized batches to the buyer. The items delivered are presented to the end customers in a display area. Demand is assumed to be positively dependent on the amount of items displayed. The objective is to maximize total supply chain profit. The numerical analysis shows that buyer-vendor coordination is more profitable in situations when demand is more stock dependent. It also shows that the effect of double marginalization provides a link between the non-coordinated and the coordinated case.Batch production Double marginalization Inventory Integrated vendor-buyer model Stock-dependent demand