Optimality of Inventory Decisions and Shipment Policies in a Two-Echelon Inventory System under Quadratic Price Dependent Demand

Kumar, Burra Karuna; Nagaraju, Dega; Narayanan, Swathi Jamjala

doi:10.1016/j.proeng.2014.12.472

Cited by 6 publications

(2 citation statements)

References 31 publications

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“…Almost all different types of demand functions have been considered by researchers till now. For instance, linear demand function (Kim et al, 2011), Quadratic demand function (Kumar et al, 2014) and selling price raise to the negative power of price elasticity as demand function (Abad and Jaggi, 2003) and many more. Recently, Tai et al (2019) claimed that a positive correlation between price and demand increases bullwhip effect whereas the negative correlation between price and demand can be used as a tool to fight against bullwhip effect.…”

Section: Price Sensitive Demandmentioning

confidence: 99%

Impact of Price-Sensitive Demand and Premium Payment Scheme on Bullwhip Effect

Verma

Jain

Jaggi

2021

International Journal of Information Systems and Supply Chain Management

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Bullwhip effect reduces the efficiency, responsiveness, and value of the supply chain. There are some indirect causes like lead time, the number of echelons, and some direct causes of bullwhip effect such as rationing or price variation. Due to capacity constraints, retailers are forced to experience rationing of their demands. Fear of rationing usually gives rise to manipulable demand and hence increases the bullwhip effect. Moreover, if the retailer’s demand is price sensitive then it will cause price variation. The offerings of premium payment by retailers due to unfulfilled demand lure the supplier to extend his existing capacity and to allocate them more supply. In this paper, an attempt has been made to mitigate the impact of the bullwhip effect using a premium payment scheme. A technique has been coined that will help in reducing the bullwhip effect. The increased value of the supply chain on using a premium payment scheme is proof of the reduction of the bullwhip effect. Results are validated through numerical analysis.

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Section: Price Sensitive Demandmentioning

confidence: 99%

Impact of Price-Sensitive Demand and Premium Payment Scheme on Bullwhip Effect

Verma

Jain

Jaggi

2021

International Journal of Information Systems and Supply Chain Management

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“…The discounted cash flow and optimization technique were used to derive the optimal solution. Kumar et al (2014) proposed a twoechelon inventory system to determine the optimal inventory decisions and shipment policies for a noncoordinated supply chain and a coordinated supply chain under quadratic price dependent demand. They considered a model supply chain where one product is being supplied to a single retailer by a manufacturer.…”

Section: Introductionmentioning

confidence: 99%

Optimal selling price, replenishment lot size and number of shipments for two-echelon supply chain model with deteriorating items

pour¹,

Ghobadi²

2018

10.5267/j.dsl

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This paper deals with a pricing and production-distribution model for a deteriorating item in a two-echelon supply chain. The profit function for the manufacturer and retailer in the integrated supply chain is derived. The manufacturer's production batch size is regulated to an integer multiple of the discrete delivery lot quantity to the retailer. The objective is to maximize the total profit per unit time by finding the optimal selling price, production lot size, total cycle time, number of deliveries, and delivery lot size, simultaneously. Based on the notion of optimal interval, we outline an effective algorithm for finding the optimal solution. Finally, the authors present a numerical example to illustrate the theoretical results of the model. Sensitivity analysis for the optimal solution with respect to major parameters is also carried out. The results show that, when the deterioration rate increases, both the optimal production lot size and cycle time decrease. It is interesting to note that an increase in the deterioration rate also tends to reduce the delivery lot size without affecting the number of deliveries per production batch. Also, the optimal interval for N does not change when deterioration rate changes. Reductions in the inventory cycle times for both parties demonstrate the negative effects of deterioration on the supply chain.

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