IDEAS home Printed from https://ideas.repec.org/a/spr/annopr/v257y2017i1d10.1007_s10479-014-1784-2.html
   My bibliography  Save this article

Close integration of pricing and supply chain decisions has strategic as well as operations level benefits

Author

Listed:
  • Peter C. Bell

    (Western University)

  • Jing Chen

    (Dalhousie University)

Abstract

Supply chain decision-making processes that are not tightly integrated with marketing decisions may well be costing the firm twice. First, this will promote poor operations level decisions and second, this may provide management with a view of their firm that will lead to inappropriate strategic decisions. The motivation of this paper is to explore the relationships between decision-making at various levels within the firm and, in particular, the relationship between the firm’s strategic and operations decision making. Using the case of a manufacturer managing a supply chain we show that increasing revenues may not increase profits and cutting costs may also reduce profits. We also show that the strategic or tactical view of the firm, and consequently the quality of the firm’s strategic and tactical decisions, can be highly dependent on how the firm makes low-level marketing and supply chain decisions. Our results illustrate the significant benefit available to manufacturers who can successfully and tightly integrate production, logistics, and marketing decision making. Such integration will improve operations level decisions and also provide an improved platform for tactical and strategic decisions.

Suggested Citation

  • Peter C. Bell & Jing Chen, 2017. "Close integration of pricing and supply chain decisions has strategic as well as operations level benefits," Annals of Operations Research, Springer, vol. 257(1), pages 77-93, October.
    • Handle: RePEc:spr:annopr:v:257:y:2017:i:1:d:10.1007_s10479-014-1784-2
    DOI: 10.1007/s10479-014-1784-2
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10479-014-1784-2
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s10479-014-1784-2?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. Ann Bixby & Brian Downs & Mike Self, 2006. "A Scheduling and Capable-to-Promise Application for Swift & Company," Interfaces, INFORMS, vol. 36(1), pages 69-86, February.
    2. M. K. Geraghty & Ernest Johnson, 1997. "Revenue Management Saves National Car Rental," Interfaces, INFORMS, vol. 27(1), pages 107-127, February.
    3. Chen, Jing & Bell, Peter C., 2009. "The impact of customer returns on pricing and order decisions," European Journal of Operational Research, Elsevier, vol. 195(1), pages 280-295, May.
    4. Beamon, Benita M., 1998. "Supply chain design and analysis:: Models and methods," International Journal of Production Economics, Elsevier, vol. 55(3), pages 281-294, August.
    5. Gabriel R. Bitran & Susana V. Mondschein, 1995. "An Application of Yield Management to the Hotel Industry Considering Multiple Day Stays," Operations Research, INFORMS, vol. 43(3), pages 427-443, June.
    6. John Pooley, 1994. "Integrated Production and Distribution Facility Planning at Ault Foods," Interfaces, INFORMS, vol. 24(4), pages 113-121, August.
    7. Susan Keene & David Alberti & Gary Henby & A. J. Brohinsky & Sridhar Tayur, 2006. "Caterpillar’s Building Construction Products Division Improves and Stabilizes Product Availability," Interfaces, INFORMS, vol. 36(4), pages 283-295, August.
    8. Brian T. Denton & John Forrest & R. John Milne, 2006. "IBM Solves a Mixed-Integer Program to Optimize Its Semiconductor Supply Chain," Interfaces, INFORMS, vol. 36(5), pages 386-399, October.
    9. Gabriel R. Bitran & Stephen M. Gilbert, 1996. "Managing Hotel Reservations with Uncertain Arrivals," Operations Research, INFORMS, vol. 44(1), pages 35-49, February.
    10. Kannapha Amaruchkul & William L. Cooper & Diwakar Gupta, 2007. "Single-Leg Air-Cargo Revenue Management," Transportation Science, INFORMS, vol. 41(4), pages 457-469, November.
    11. Awi Federgruen & Aliza Heching, 1999. "Combined Pricing and Inventory Control Under Uncertainty," Operations Research, INFORMS, vol. 47(3), pages 454-475, June.
    12. Barry C. Smith & John F. Leimkuhler & Ross M. Darrow, 1992. "Yield Management at American Airlines," Interfaces, INFORMS, vol. 22(1), pages 8-31, February.
    13. Robert C. Leachman & Jeenyoung Kang & Vincent Lin, 2002. "SLIM: Short Cycle Time and Low Inventory in Manufacturing at Samsung Electronics," Interfaces, INFORMS, vol. 32(1), pages 61-77, February.
    14. Chen, Jing & Wang, Jian & Bell, Peter C., 2014. "Lease expiration management for a single lease term in the apartment industry," European Journal of Operational Research, Elsevier, vol. 238(1), pages 233-244.
    15. P C Bell & J Chen, 2006. "Cutting costs or enhancing revenues? An example of a multi-product firm with impatient customers illustrates an important choice facing operational researchers," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 57(4), pages 443-449, April.
    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. Kolar, Petr & Schramm, Hans-Joachim & Prockl, Günter, 2018. "Intermodal transport and repositioning of empty containers in Central and Eastern Europe hinterland," Journal of Transport Geography, Elsevier, vol. 69(C), pages 73-82.

    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. Chen, Jing & Wang, Jian & Bell, Peter C., 2014. "Lease expiration management for a single lease term in the apartment industry," European Journal of Operational Research, Elsevier, vol. 238(1), pages 233-244.
    2. Jeffrey I. McGill & Garrett J. van Ryzin, 1999. "Revenue Management: Research Overview and Prospects," Transportation Science, INFORMS, vol. 33(2), pages 233-256, May.
    3. Gabriel Bitran & René Caldentey, 2003. "An Overview of Pricing Models for Revenue Management," Manufacturing & Service Operations Management, INFORMS, vol. 5(3), pages 203-229, August.
    4. Ikeda, Shunnosuke & Nishimura, Naoki & Sukegawa, Noriyoshi & Takano, Yuichi, 2023. "Prescriptive price optimization using optimal regression trees," Operations Research Perspectives, Elsevier, vol. 11(C).
    5. Pak, K. & Dekker, R. & Kindervater, G.A.P., 2003. "Airline Revenue Management with Shifting Capacity," Econometric Institute Research Papers ERS-2003-091-LIS, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
    6. Guadix, José & Cortés, Pablo & Onieva, Luis & Muñuzuri, Jesús, 2010. "Technology revenue management system for customer groups in hotels," Journal of Business Research, Elsevier, vol. 63(5), pages 519-527, May.
    7. Syed Asif Raza & Rafi Ashrafi & Ali Akgunduz, 2020. "A bibliometric analysis of revenue management in airline industry," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 19(6), pages 436-465, December.
    8. Aldric Vives & Marta Jacob & Marga Payeras, 2018. "Revenue management and price optimization techniques in the hotel sector," Tourism Economics, , vol. 24(6), pages 720-752, September.
    9. Barry C. Smith & Dirk P. Günther & B. Venkateshwara Rao & Richard M. Ratlife, 2001. "E-Commerce and Operations Research in Airline Planning, Marketing, and Distribution," Interfaces, INFORMS, vol. 31(2), pages 37-55, April.
    10. Klein, Robert & Koch, Sebastian & Steinhardt, Claudius & Strauss, Arne K., 2020. "A review of revenue management: Recent generalizations and advances in industry applications," European Journal of Operational Research, Elsevier, vol. 284(2), pages 397-412.
    11. Hu, Qiying & Wei, Yihua & Xia, Yusen, 2010. "Revenue management for a supply chain with two streams of customers," European Journal of Operational Research, Elsevier, vol. 200(2), pages 582-598, January.
    12. Ayanso, Anteneh & Diaby, Moustapha & Nair, Suresh K., 2006. "Inventory rationing via drop-shipping in Internet retailing: A sensitivity analysis," European Journal of Operational Research, Elsevier, vol. 171(1), pages 135-152, May.
    13. Richard Metters & Carrie Queenan & Mark Ferguson & Laura Harrison & Jon Higbie & Stan Ward & Bruce Barfield & Tammy Farley & H. Ahmet Kuyumcu & Amar Duggasani, 2008. "The “Killer Application” of Revenue Management: Harrah's Cherokee Casino & Hotel," Interfaces, INFORMS, vol. 38(3), pages 161-175, June.
    14. Samir Elhedhli & Jean-Louis Goffin, 2005. "Efficient Production-Distribution System Design," Management Science, INFORMS, vol. 51(7), pages 1151-1164, July.
    15. Breffni M Noone, 2016. "Pricing for hotel revenue management: Evolution in an era of price transparency," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 15(3), pages 264-269, July.
    16. Youyi Feng & Baichun Xiao, 2000. "A Continuous-Time Yield Management Model with Multiple Prices and Reversible Price Changes," Management Science, INFORMS, vol. 46(5), pages 644-657, May.
    17. Terzi, Mourad & Ouazene, Yassine & Yalaoui, Alice & Yalaoui, Farouk, 2023. "Lot-sizing and pricing decisions under attraction demand models and multi-channel environment: New efficient formulations," Operations Research Perspectives, Elsevier, vol. 10(C).
    18. Masato Wada & Felipe Delgado & Bernardo K. Pagnoncelli, 2017. "A risk averse approach to the capacity allocation problem in the airline cargo industry," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 68(6), pages 643-651, June.
    19. Wang, Xiaojia & Fung, Richard Y.K., 2014. "An option-based hedging mechanism for managing the risk of overbooking in parallel airline alliances," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 70(C), pages 146-162.
    20. Wang, Chong & Chen, Jing & Chen, Xu, 2017. "Pricing and order decisions with option contracts in the presence of customer returns," International Journal of Production Economics, Elsevier, vol. 193(C), pages 422-436.

    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:spr:annopr:v:257:y:2017:i:1:d:10.1007_s10479-014-1784-2. 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: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    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.