International Journal of Advanced Culture Technology

The International Promotion Agency of Culture Technology (국제문화기술진흥원)
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Sensitivity Analysis for Joint Pricing and Lot-sizing Model with Price Dependent Demand under Day terms Supplier Credit in a Two-stage Supply Chain

  • Shinn, Seong-Whan (Department of Advanced Materials & Chemical Engineering, Halla University)
  • Received : 2020.04.01
  • Accepted : 2020.04.27
  • Published : 2020.06.30
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Abstract

In this paper, we analyze the buyer's joint pricing and lot-sizing model in a two-stage supply chain consisting of the supplier, the buyer and the customer. It is assumed that the supplier will permit a certain fixed period for settling the amount the buyer owes to him for the items supplied in order to stimulate the demand for the product. Generally, credit transactions would have a positive effect to the buyer. The availability of credit transactions from the supplier effectively reduces the cost of holding stocks for the buyer and therefore, the buyer has a lot of price options to choose his sales price for a customer in anticipation of increased the customer's demand and, as a result, it will appear to increase the buyer's inventory levels. On the other hand, in the case of decaying products in which their utility decay over time, the decaying rate with time may be expected to reduce inventory levels. In this regard, we need to analyze how much the length of credit period and the decaying rate affect the buyer's pricing and lot-sizing policy. For the analysis, we consider the situation where the customer's demand is represented as a linearly decreasing function of the buyer's sales price. From this perspective, we formulate the buyer's annual net profit and analyze the effect of the length of credit period and decaying rate of the product on the buyer's inventory policy numerically.

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References

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