Abstract
This paper develops an economic production quantity model in a three-echelon supply chain composing of a supplier, a manufacturer and a wholesaler under two scenarios. As the first scenario, we consider a return contract between the outside supplier and the supplier and also between the manufacturer and the wholesaler, but in the second one, the return policy between the manufacturer and the wholesaler is not applied. Here, it is assumed that shortage is permitted and demand is price-sensitive. The principal goal of the research is to maximize the total profit of the chain by optimizing the order quantity of the supplier and the selling prices of the manufacturer and the wholesaler. Nash-equilibrium approach is considered between the chain members. In the end, a numerical example is presented to clarify the applicability of the introduced model and compare the profit of the chain under two scenarios.
Highlights
Introduction and literature reviewPricing and ordering decisions play crucial role in optimizing the costs of inventory systems
This paper develops an economic production quantity model in a three-echelon supply chain composing of a supplier, a manufacturer and a wholesaler under two scenarios
In this paper, we examine the optimal pricing and inventory decisions in a three-echelon supply chain under a return contract where the backordering shortage is permitted and a Nash-equilibrium approach is used to deal with the proposed problem
Summary
Pricing and ordering decisions play crucial role in optimizing the costs of inventory systems. Based on the present literature review, none of the authors considered a return contract as the coordination decision policy in a three-echelon supply chain by employing pricing and ordering strategies. In this paper, we examine the optimal pricing and inventory decisions in a three-echelon supply chain under a return contract where the backordering shortage is permitted and a Nash-equilibrium approach is used to deal with the proposed problem. The objective of the research is to determine the optimal values of the order quantity of supplier and the selling prices of manufacturer and wholesaler as the decision variables by applying the optimal pricing and inventory decision strategies such that the profit of the chain is optimized. An economic production and inventory problem in a three-echelon supply chain is developed under two scenarios where a supplier, a manufacturer and one wholesaler are the members of chain. It is assumed that to prevent shortage, rp must be greater than or equal to the wholesale’s demand, rp ! dw
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
