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A supplier's pricing model under a customer's economic purchasing policy

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  • Banerjee, Avijit

Abstract

This paper develops a pricing model from the perspective of a supplier who produces and supplies a product to order from a single customer on a lot-for-lot basis. Assuming that the customer's ordering behavior is optimal, i.e. the customer follows his economic purchasing policy, the objective of the supplier is to determine the product's selling price, so that a specified gross profit goal is achieved. The algebraic interactions between the price of the product, the customer's EOQ and the supplier's profit level are taken into consideration during the model construction process. The concepts developed are illustrated through a numerical example, which attempts to demonstrate the usefulness of the model in setting an appropriate price for a product under the conditions described.

Suggested Citation

  • Banerjee, Avijit, 1986. "A supplier's pricing model under a customer's economic purchasing policy," Omega, Elsevier, vol. 14(5), pages 409-414.
    • Handle: RePEc:eee:jomega:v:14:y:1986:i:5:p:409-414
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    Cited by:

    1. Benton, W. C. & Park, Seungwook, 1996. "A classification of literature on determining the lot size under quantity discounts," European Journal of Operational Research, Elsevier, vol. 92(2), pages 219-238, July.
    2. Sarmah, S.P. & Acharya, D. & Goyal, S.K., 2006. "Buyer vendor coordination models in supply chain management," European Journal of Operational Research, Elsevier, vol. 175(1), pages 1-15, November.
    3. Banerjee, Avijit, 2005. "Concurrent pricing and lot sizing for make-to-order contract production," International Journal of Production Economics, Elsevier, vol. 93(1), pages 189-195, January.

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