TY - JOUR
T1 - Combined pricing and supply chain operations under price-dependent stochastic demand
AU - Lin, Cheng Chang
AU - Wu, Yi Chen
N1 - Funding Information:
This research was partially supported by Grant NSC95–2416-H-006–031-MY3 from the National Science Council of Taiwan, ROC .
PY - 2014
Y1 - 2014
N2 - In this study, we determined product prices and designed an integrated supply chain operations plan that maximized a manufacturer's expected profit. The computational results of this study revealed that as the variance of the demand distribution increases, a manufacturer will increase its inventory to levels that are greater than the anticipated demand to prevent the potential loss of sales and will simultaneously raise product prices to obtain a greater profit. In the cost minimization approach, the manufacturer may earn the highest possible profits, as determined by the profit optimization approach, only if this firm precisely forecasts the mean market demand for its products. Greater inaccuracies in this forecast will produce lower levels of expected profit.
AB - In this study, we determined product prices and designed an integrated supply chain operations plan that maximized a manufacturer's expected profit. The computational results of this study revealed that as the variance of the demand distribution increases, a manufacturer will increase its inventory to levels that are greater than the anticipated demand to prevent the potential loss of sales and will simultaneously raise product prices to obtain a greater profit. In the cost minimization approach, the manufacturer may earn the highest possible profits, as determined by the profit optimization approach, only if this firm precisely forecasts the mean market demand for its products. Greater inaccuracies in this forecast will produce lower levels of expected profit.
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U2 - 10.1016/j.apm.2013.09.017
DO - 10.1016/j.apm.2013.09.017
M3 - Article
AN - SCOPUS:84894827355
VL - 38
SP - 1823
EP - 1837
JO - Applied Mathematical Modelling
JF - Applied Mathematical Modelling
SN - 0307-904X
IS - 5-6
ER -