Journal of Korean Institute of Industrial Engineers (대한산업공학회지)

Korean Institute of Industrial Engineers (대한산업공학회)
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A Combined Approach of Pricing and (S-1, S) Inventory Policy in a Two-Echelon Supply Chain with Lost Sales Allowed

다단계 SCM 환경에서 품절을 고려한 최적의 제품가격 및 재고정책 결정

  • 성창섭 (한국과학기술원 산업공학과) ;
  • 박선후 (한국과학기술원 산업공학과)
  • Published : 2004.06.30
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Abstract

This paper considers a continuous-review two-echelon inventory control problem with one-to-one replenishment policy incorporated and with lost sales allowed where demand arrives in a stationary Poisson process. The problem is formulated using METRIC-approximation in a combined approach of pricing and (S-l, S) inventory policy, for which a heuristic solution algorithm is derived with respect to the corresponding one-warehouse multi-retailer supply chain. Specifically, decisions on retail pricing and warehouse inventory policies are made in integration to maximize total profit in the supply chain. The objective function of the model consists of sub-functions of revenue and cost (holding cost and penalty cost). To test the effectiveness and efficiency of the proposed algorithm, numerical experiments are performed with two cases. The first case deals with identical retailers and the second case deals with different retailers with different market sizes. The computational results show that the proposed algorithm is efficient and derives quite good decisions.

Keywords

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