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A location-inventory-pricing model in a supply chain distribution network with price-sensitive demands and inventory-capacity constraints

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  • Ahmadi-Javid, Amir
  • Hoseinpour, Pooya

Abstract

This paper presents a location-inventory-pricing model for designing the distribution network of a supply chain with price-sensitive demands and inventory-capacity constraints. The supply chain has market power and uses markup pricing. An efficient Lagrangian relaxation algorithm is proposed to solve the model. Our numerical study shows that by moderately increasing the number of possible values for pricing decisions, the model can be used to find near-optimal solutions of a similar location-inventory-pricing problem with continuous pricing decisions. The approach used here to incorporate pricing decisions can be applied to other supply-chain design and planning problems with price-sensitive demands.

Suggested Citation

  • Ahmadi-Javid, Amir & Hoseinpour, Pooya, 2015. "A location-inventory-pricing model in a supply chain distribution network with price-sensitive demands and inventory-capacity constraints," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 82(C), pages 238-255.
    • Handle: RePEc:eee:transe:v:82:y:2015:i:c:p:238-255
    DOI: 10.1016/j.tre.2015.06.010
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    3. Nasiri, G. Reza & Deymeh, Hadi & Karimi, Behrooz & Miandoabchi, Elnaz, 2021. "Incorporating sales and marketing considerations into a competitive multi-echelon distribution network design problem with pricing strategy in a stochastic environment," Journal of Retailing and Consumer Services, Elsevier, vol. 62(C).
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    5. Jahani, Hamed & Abbasi, Babak & Sheu, Jiuh-Biing & Klibi, Walid, 2024. "Supply chain network design with financial considerations: A comprehensive review," European Journal of Operational Research, Elsevier, vol. 312(3), pages 799-839.
    6. Hoseinpour, Pooya & Jalili Marand, Ata, 2022. "Designing a service system with price- and distance-sensitive demand: A case study in mining industry," European Journal of Operational Research, Elsevier, vol. 303(3), pages 1355-1371.
    7. Fathi, Mahdi & Khakifirooz, Marzieh & Diabat, Ali & Chen, Huangen, 2021. "An integrated queuing-stochastic optimization hybrid Genetic Algorithm for a location-inventory supply chain network," International Journal of Production Economics, Elsevier, vol. 237(C).
    8. Hoseinpour, Pooya & Ahmadi-Javid, Amir, 2016. "A profit-maximization location-capacity model for designing a service system with risk of service interruptions," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 96(C), pages 113-134.
    9. Wang, Minke & Wu, Jiang & Kafa, Nadine & Klibi, Walid, 2020. "Carbon emission-compliance green location-inventory problem with demand and carbon price uncertainties," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 142(C).

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