Abstract
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.
| Original language | English |
|---|---|
| Pages (from-to) | 1823-1837 |
| Number of pages | 15 |
| Journal | Applied Mathematical Modelling |
| Volume | 38 |
| Issue number | 5-6 |
| DOIs | |
| Publication status | Published - 2014 Jan 1 |
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All Science Journal Classification (ASJC) codes
- Applied Mathematics
- Modelling and Simulation
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Combined pricing and supply chain operations under price-dependent stochastic demand. / Lin, Cheng-Chang; Wu, Yi Chen.
In: Applied Mathematical Modelling, Vol. 38, No. 5-6, 01.01.2014, p. 1823-1837.Research output: Contribution to journal › Article
TY - JOUR
T1 - Combined pricing and supply chain operations under price-dependent stochastic demand
AU - Lin, Cheng-Chang
AU - Wu, Yi Chen
PY - 2014/1/1
Y1 - 2014/1/1
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.
UR - http://www.scopus.com/inward/record.url?scp=84894827355&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=84894827355&partnerID=8YFLogxK
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 -