Manufacturer's Optimal Price Research Articles

Coordination of dual-channel supply chains with uncertain demand information

AbstractUncertain demand information increases the difficulty of decision-making in supply chains, especially in the light of inventory costs. This article researches a two-echelon dual-channel fresh agricultural product (FAP) supply chain, and discusses optimal decision-making and the value of information sharing using the Stackelberg game. To eliminate the double marginalization effect between supply chain parties, a two-part linear tariff contract is introduced for coordination. The results show that information sharing is always profitable for the manufacturer, but not for the retailer. The inventory and shortage costs will reduce the manufacturer's optimal pricing and fresh-keeping effort level. When the manufacturer overestimates the market demand predicted by the retailer, asymmetric information will increase the manufacturer’s inventory. The results provide important managerial implications for effective supply chain management.

Selecting the supply chain financing mode under price-sensitive demand: Confirmed warehouse financing vs. trade credit

In a product market with price-sensitive demand, we examine a supply chain consisting of one manufacturer and one capital-constrained retailer. The retailer may purchase by borrowing by securing confirmed warehouse financing (CWF) from a competitive bank or the manufacturer's trade credit financing (TCF), provided that it is also to the latter's benefit to extend TCF. We obtain the manufacturer's optimal pricing decision in the two financing modes under the wholesale price contract that coordinates the supply chain given a wider range of wholesale prices in CWF. We find that CWF is more suitable for the customer segment for which the unit retail price is low and demand is stable, so the product can be monetized quickly; TCF is suitable for the customer segment for which the unit retail price is high and has a high price elasticity of demand and hence for long-term investment. The repurchase price is an important factor affecting the participants' selection of CWF.

Manufacturer's optimal pricing and lot‐sizing policies under trade‐credit financing

In the year 2006, Teng et al considered an appropriate economic production quantity (EPQ) model in which the manufacturer receives the supplier's trade credit and provides trade credit to the customer simultaneously. The following two payment methods were discussed by Teng et al:The main purpose of this paper is summarized below:Finally, with a view to further motivating the interested researchers for using the methodology and mathematical analytic techniques in several other contexts in the field, we have chosen to include, in Section 12, a number of related recent works in the field.

Component Procurement Strategies in Decentralized Assemble-to-Order Systems with Time-Dependent Pricing

We consider a contract manufacturer who procures multiple components from independent suppliers to produce an assemble-to-order customized product for a client. The unit price of the product depends on the manufacturer's delivery lead time. We explore how the manufacturer can use a vendor-managed consignment inventory (VMCI) scheme to manage the underlying risk and coordinate independent suppliers' decisions on the production quantities of their components under demand uncertainty. We formulate the problem as a Stackelberg game played by the manufacturer against her component suppliers to determine her pricing policy for suppliers' consignment inventories. We further develop an efficient algorithm for finding the manufacturer's optimal pricing scheme. Our results provide useful insights for managing components in these types of assemble-to-order environments and for understanding how component production cost and procurement lead times affect individual firms' performance in decentralized assembly channels.

Coordinating orders in supply chains through price discounts

In this paper, we examine the issue of order coordination between a supplier and multiple retailers in a decentralized multi-echelon inventory/distribution system where the supplier provides a product to multiple retailers who experience static demand and standard inventory costs. Specifically, we propose and analyze a new policy where a manufacturer, who outsources production to an Original Equipment Manufacturer, offers a price discount to retailers when they coordinate the timing of their orders with the manufacturer's order cycle. We show that our proposed policy can lead to more efficient supply chains under certain conditions, and present a straightforward method for finding the manufacturer's optimal price discount in this decentralized supply chain. A numerical experiment illustrates the managerial implications of our model as well as conditions when a manufacturer should consider adopting such a policy.

Coordinating orders in supply chains through price discounts

In this paper, we examine the issue of order coordination between a supplier and multiple retailers in a decentralized multi-echelon inventory/distribution system where the supplier provides a product to multiple retailers who experience static demand and standard inventory costs. Specifically, we propose and analyze a new policy where a manufacturer, who outsources production to an Original Equipment Manufacturer, offers a price discount to retailers when they coordinate the timing of their orders with the manufacturer/s order cycle. We show that our proposed policy can lead to more efficient supply chains under certain conditions, and present a straightforward method for finding the manufacturer's optimal price discount in this decentralized supply chain. A numerical experiment illustrates the managerial implications of our model as well as conditions when a manufacturer should consider adopting such a policy.