Combined pricing and supply chain operations under price-dependent stochastic demand

Cheng-Chang Lin, Yi Chen Wu

Research output: Contribution to journalArticle

11 Citations (Scopus)

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 languageEnglish
Pages (from-to)1823-1837
Number of pages15
JournalApplied Mathematical Modelling
Volume38
Issue number5-6
DOIs
Publication statusPublished - 2014 Jan 1

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Stochastic Demand
Supply Chain
Supply chains
Pricing
Profit
Profitability
Dependent
Costs
Forecast
Cost Minimization
Computational Results
Sales
Optimization
Demand

All Science Journal Classification (ASJC) codes

  • Applied Mathematics
  • Modelling and Simulation

Cite this

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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 journalArticle

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