IDEAS home Printed from https://ideas.repec.org/a/eee/ejores/v247y2015i1p83-92.html
   My bibliography  Save this article

Determining the retailer's replenishment policy considering multiple capacitated suppliers and price-sensitive demand

Author

Listed:
  • Adeinat, Hamza
  • Ventura, José A.

Abstract

This article presents a mixed integer nonlinear programming model to find the optimal selling price and replenishment policy for a particular type of product in a supply chain defined by a single retailer and multiple potential suppliers. Each supplier offers all-unit quantity discounts as an incentive mechanism. Multiple orders are allowed to be submitted to the selected suppliers during a repeating order cycle. The demand rate is considered to be not constant but dependent upon the selling price. The model provides the optimal number of orders and corresponding order quantities for the selected suppliers, and the optimal demand rate and selling price that maximize the total profit per time unit under suppliers’ capacity and quality constraints. In addition, we provide sufficient conditions under which there exists an optimal solution where the retailer only orders from one supplier. We also apply the Karush–Kuhn–Tucker conditions to investigate the impact of supplier's capacity on the optimal sourcing strategy. The results show that, there may exist a range of capacity values for the dominating supplier, where the retailer's optimal sourcing strategy is to consider multiple suppliers without fully utilizing the dominating supplier's capacity. A numerical example is presented to illustrate the proposed model.

Suggested Citation

  • Adeinat, Hamza & Ventura, José A., 2015. "Determining the retailer's replenishment policy considering multiple capacitated suppliers and price-sensitive demand," European Journal of Operational Research, Elsevier, vol. 247(1), pages 83-92.
    • Handle: RePEc:eee:ejores:v:247:y:2015:i:1:p:83-92
    DOI: 10.1016/j.ejor.2015.05.064
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0377221715004762
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ejor.2015.05.064?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Yu-Jen Lin & Chia-Huei Ho, 2011. "Integrated inventory model with quantity discount and price-sensitive demand," TOP: An Official Journal of the Spanish Society of Statistics and Operations Research, Springer;Sociedad de Estadística e Investigación Operativa, vol. 19(1), pages 177-188, July.
    2. Shiming Deng & Candace A. Yano, 2006. "Joint Production and Pricing Decisions with Setup Costs and Capacity Constraints," Management Science, INFORMS, vol. 52(5), pages 741-756, May.
    3. Viswanathan, S. & Wang, Qinan, 2003. "Discount pricing decisions in distribution channels with price-sensitive demand," European Journal of Operational Research, Elsevier, vol. 149(3), pages 571-587, September.
    4. Hua, Guowei & Wang, Shouyang & Cheng, T.C.E., 2012. "Optimal order lot sizing and pricing with free shipping," European Journal of Operational Research, Elsevier, vol. 218(2), pages 435-441.
    5. Z. Kevin Weng, 1995. "Channel Coordination and Quantity Discounts," Management Science, INFORMS, vol. 41(9), pages 1509-1522, September.
    6. Taleizadeh, Ata Allah & Noori-daryan, Mahsa & Cárdenas-Barrón, Leopoldo Eduardo, 2015. "Joint optimization of price, replenishment frequency, replenishment cycle and production rate in vendor managed inventory system with deteriorating items," International Journal of Production Economics, Elsevier, vol. 159(C), pages 285-295.
    7. Burwell, Timothy H. & Dave, Dinesh S. & Fitzpatrick, Kathy E. & Roy, Melvin R., 1997. "Economic lot size model for price-dependent demand under quantity and freight discounts," International Journal of Production Economics, Elsevier, vol. 48(2), pages 141-155, January.
    8. Qi, Xiangtong, 2007. "Order splitting with multiple capacitated suppliers," European Journal of Operational Research, Elsevier, vol. 178(2), pages 421-432, April.
    9. Ho, William & Xu, Xiaowei & Dey, Prasanta K., 2010. "Multi-criteria decision making approaches for supplier evaluation and selection: A literature review," European Journal of Operational Research, Elsevier, vol. 202(1), pages 16-24, April.
    10. Huang, Yun & Huang, George Q. & Newman, Stephen T., 2011. "Coordinating pricing and inventory decisions in a multi-level supply chain: A game-theoretic approach," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 47(2), pages 115-129, March.
    11. Sajadieh, Mohsen S. & Akbari Jokar, Mohammad R., 2009. "Optimizing shipment, ordering and pricing policies in a two-stage supply chain with price-sensitive demand," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 45(4), pages 564-571, July.
    12. Kunreuther, Howard & Richard, Jean Francois, 1971. "Optimal Pricing and Inventory Decisions for Non-Seasonal Items," Econometrica, Econometric Society, vol. 39(1), pages 173-175, January.
    13. T. M. Whitin, 1955. "Inventory Control and Price Theory," Management Science, INFORMS, vol. 2(1), pages 61-68, October.
    14. Boyaci, Tamer & Gallego, Guillermo, 2002. "Coordinating pricing and inventory replenishment policies for one wholesaler and one or more geographically dispersed retailers," International Journal of Production Economics, Elsevier, vol. 77(2), pages 95-111, May.
    15. Abad, P. L. & Aggarwal, Vijay, 2005. "Incorporating transport cost in the lot size and pricing decisions with downward sloping demand," International Journal of Production Economics, Elsevier, vol. 95(3), pages 297-305, March.
    16. Wang, Chuanxu & Huang, Rongbing & Wei, Qianli, 2015. "Integrated pricing and lot-sizing decision in a two-echelon supply chain with a finite production rate," International Journal of Production Economics, Elsevier, vol. 161(C), pages 44-53.
    17. Kim, DaeSoo & Lee, Won J., 1998. "Optimal joint pricing and lot sizing with fixed and variable capacity," European Journal of Operational Research, Elsevier, vol. 109(1), pages 212-227, August.
    18. Qin, Yiyan & Tang, Huanwen & Guo, Chonghui, 2007. "Channel coordination and volume discounts with price-sensitive demand," International Journal of Production Economics, Elsevier, vol. 105(1), pages 43-53, January.
    19. Abraham Mendoza & Jose A. Ventura, 2008. "An effective method to supplier selection and order quantity allocation," International Journal of Business and Systems Research, Inderscience Enterprises Ltd, vol. 2(1), pages 1-15.
    20. Meir J. Rosenblatt & Yale T. Herer & Ilan Hefter, 1998. "Note. An Acquisition Policy for a Single Item Multi-Supplier System," Management Science, INFORMS, vol. 44(11-Part-2), pages 96-100, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Samuel Yousefi & Mustafa Jahangoshai Rezaee & Maghsud Solimanpur, 2021. "Supplier selection and order allocation using two-stage hybrid supply chain model and game-based order price," Operational Research, Springer, vol. 21(1), pages 553-588, March.
    2. Ventura, José A. & Bunn, Kevin A. & Venegas, Bárbara B. & Duan, Lisha, 2021. "A coordination mechanism for supplier selection and order quantity allocation with price-sensitive demand and finite production rates," International Journal of Production Economics, Elsevier, vol. 233(C).
    3. Veronica Bulat & Irina Calugareanu, 2021. "The Aim of Primary and Secondary Sources in International Supply Chain Selection Process," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(2), pages 608-617, December.
    4. Adeinat, Hamza & Ventura, Jose A., 2018. "Integrated pricing and supplier selection in a two-stage supply chain," International Journal of Production Economics, Elsevier, vol. 201(C), pages 193-202.
    5. Adeinat, Hamza & Pazhani, Subramanian & Mendoza, Abraham & Ventura, Jose A., 2022. "Coordination of pricing and inventory replenishment decisions in a supply chain with multiple geographically dispersed retailers," International Journal of Production Economics, Elsevier, vol. 248(C).
    6. Omar Abbaas & Jose A. Ventura, 2024. "An Iterative Procurement Combinatorial Auction Mechanism for the Multi-Item, Multi-Sourcing Supplier-Selection and Order-Allocation Problem under a Flexible Bidding Language and Price-Sensitive Demand," Mathematics, MDPI, vol. 12(14), pages 1-30, July.
    7. Li, Xin & Ventura, José A. & Venegas, Bárbara B. & Kweon, Sang Jin & Hwang, Seong Wook, 2018. "An integrated acquisition policy for supplier selection and lot sizing considering total quantity discounts and a quality constraint," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 119(C), pages 19-40.
    8. Rajiv Kumar Sharma, 2022. "Examining interaction among supplier selection strategies in an outsourcing environment using ISM and fuzzy logic approach," International Journal of System Assurance Engineering and Management, Springer;The Society for Reliability, Engineering Quality and Operations Management (SREQOM),India, and Division of Operation and Maintenance, Lulea University of Technology, Sweden, vol. 13(5), pages 2175-2194, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Adeinat, Hamza & Ventura, Jose A., 2018. "Integrated pricing and supplier selection in a two-stage supply chain," International Journal of Production Economics, Elsevier, vol. 201(C), pages 193-202.
    2. Adeinat, Hamza & Pazhani, Subramanian & Mendoza, Abraham & Ventura, Jose A., 2022. "Coordination of pricing and inventory replenishment decisions in a supply chain with multiple geographically dispersed retailers," International Journal of Production Economics, Elsevier, vol. 248(C).
    3. Wang, Chuanxu & Huang, Rongbing & Wei, Qianli, 2015. "Integrated pricing and lot-sizing decision in a two-echelon supply chain with a finite production rate," International Journal of Production Economics, Elsevier, vol. 161(C), pages 44-53.
    4. Ventura, José A. & Bunn, Kevin A. & Venegas, Bárbara B. & Duan, Lisha, 2021. "A coordination mechanism for supplier selection and order quantity allocation with price-sensitive demand and finite production rates," International Journal of Production Economics, Elsevier, vol. 233(C).
    5. W K Chiang & Y Feng, 2010. "Retailer or e-tailer? Strategic pricing and economic-lot-size decisions in a competitive supply chain with drop-shipping," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 61(11), pages 1645-1653, November.
    6. Hyun-soo Ahn & Mehmet Gümüş & Philip Kaminsky, 2007. "Pricing and Manufacturing Decisions When Demand Is a Function of Prices in Multiple Periods," Operations Research, INFORMS, vol. 55(6), pages 1039-1057, December.
    7. Bajwa, Naeem & Sox, Charles R. & Ishfaq, Rafay, 2016. "Coordinating pricing and production decisions for multiple products," Omega, Elsevier, vol. 64(C), pages 86-101.
    8. Duan, Lisha & Ventura, José A., 2019. "A Dynamic Supplier Selection and Inventory Management Model for a Serial Supply Chain with a Novel Supplier Price Break Scheme and Flexible Time Periods," European Journal of Operational Research, Elsevier, vol. 272(3), pages 979-998.
    9. Konstantin Kogan, 2019. "Discounting revisited: evolutionary perspectives on competition and coordination in a supply chain with multiple retailers," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 27(1), pages 69-92, March.
    10. Li, Xueping & Wang, Jiao & Sawhney, Rapinder, 2012. "Reinforcement learning for joint pricing, lead-time and scheduling decisions in make-to-order systems," European Journal of Operational Research, Elsevier, vol. 221(1), pages 99-109.
    11. Transchel, Sandra & Minner, Stefan, 2009. "The impact of dynamic pricing on the economic order decision," European Journal of Operational Research, Elsevier, vol. 198(3), pages 773-789, November.
    12. Ali Ekici & Baṣak Altan & Okan Örsan Özener, 2016. "Pricing decisions in a strategic single retailer/dual suppliers setting under order size constraints," International Journal of Production Research, Taylor & Francis Journals, vol. 54(7), pages 1887-1898, April.
    13. Ata Allah Taleizadeh & Bita Hazarkhani & Ilkyeong Moon, 2020. "Joint pricing and inventory decisions with carbon emission considerations, partial backordering and planned discounts," Annals of Operations Research, Springer, vol. 290(1), pages 95-113, July.
    14. Lamas, Alejandro & Chevalier, Philippe, 2018. "Joint dynamic pricing and lot-sizing under competition," European Journal of Operational Research, Elsevier, vol. 266(3), pages 864-876.
    15. Melis Teksan, Z. & Geunes, Joseph, 2016. "An EOQ model with price-dependent supply and demand," International Journal of Production Economics, Elsevier, vol. 178(C), pages 22-33.
    16. Seyed Reza Moosavi Tabatabaei & Seyed Jafar Sadjadi & Ahmad Makui, 2017. "Optimal pricing and marketing planning for deteriorating items," PLOS ONE, Public Library of Science, vol. 12(3), pages 1-21, March.
    17. Jaber, M.Y. & Goyal, S.K., 2008. "Coordinating a three-level supply chain with multiple suppliers, a vendor and multiple buyers," International Journal of Production Economics, Elsevier, vol. 116(1), pages 95-103, November.
    18. Li, Xin & Ventura, José A. & Venegas, Bárbara B. & Kweon, Sang Jin & Hwang, Seong Wook, 2018. "An integrated acquisition policy for supplier selection and lot sizing considering total quantity discounts and a quality constraint," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 119(C), pages 19-40.
    19. Salvietti, Luciano & Smith, Neale R., 2008. "A profit-maximizing economic lot scheduling problem with price optimization," European Journal of Operational Research, Elsevier, vol. 184(3), pages 900-914, February.
    20. Ekici, Ali, 2013. "An improved model for supplier selection under capacity constraint and multiple criteria," International Journal of Production Economics, Elsevier, vol. 141(2), pages 574-581.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ejores:v:247:y:2015:i:1:p:83-92. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/eor .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.