Pricing and inventory decisions in a vendor managed inventory system with revenue sharing contract

Haji, A.M.; Afzalabadi, Maryam; Rasoul, R.

doi:10.5267/j.uscm.2017.11.001

Cited by 9 publications

(5 citation statements)

References 30 publications

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“…While earlier studies did not use a game theory approach, the Stackelberg game is used in some works to describe the competitive relationships between the manufacturer and retailers. This methodology is widely used in the VMI system [3,6,19,20,27,37,43,44,51,57,70,71,73,75]. In VMI models, the manufacturer manages the finished product inventories for all the retailers as the leader dominating the SC, and the retailers are followers.…”

Section: Vendor Management Inventorymentioning

confidence: 99%

“…To facilitate modeling, most of the research in the literature assumed a fixed demand [5,16,18,25,26,28,30,31,33,34,36,38,40,42,46,47,50,52,53,57,58,67,74]. However, real-life demands are a (linear or nonlinear) function of the price [3,6,19,27,29,37,43,44,51,57,70,71,73,75]. For example, Yu et al [70] explored a VMI system with several retailers and a single manufacturer in which each retailer's demand followed the Cobb-Douglas demand function.…”

Section: Vendor Management Inventorymentioning

confidence: 99%

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Optimizing service level, price, and inventory decisions for a supply chain with retailers’ competition and cooperation under VMI strategy

et al. 2022

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In a vendor-managed inventory (VMI) system, a manufacturing vendor manages their retailer inventories. Studies on VMI-type supply chains mostly have not considered competition between retailers. There are few works on the price competition; however, to the best of the authors' knowledge, none of the papers formulated a service competition strategy. The service level is one of the competitive factors among competing retailers. Sometimes retailers choose to compete cooperatively instead of competing independently with the manufacturer. The present work investigates service, price, and inventory decisions under retailers’ competition and cooperation. Considering the manufacturer and retailers as the leader and followers, respectively, a Stackelberg game model of the problem is developed. The present study proposes a solution algorithm to search the Stackelberg-Nash equilibrium in the retailer cooperation and retailer independence models. The algorithm is numerically demonstrated to explore the impacts of decision parameters. To validate the model, a number of parameters are subjected to sensitivity analyses. It was found that a higher self-service (cross-service) level parameter would lead to higher (lower) profits of the retailer and manufacturer and the total profit in the two models. Retailer cooperation enhances retailer performance; however, manufacturer and system profits decline. Furthermore, when retailers cooperate, they are motivated to offer lower service levels.

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Section: Vendor Management Inventorymentioning

confidence: 99%

Section: Vendor Management Inventorymentioning

confidence: 99%

Optimizing service level, price, and inventory decisions for a supply chain with retailers’ competition and cooperation under VMI strategy

et al. 2022

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“…Huang et al [33] considered that the stochastic demand depends on product quality level and marketing effort level. Haji et al [34] assumed that the retailer's demand satisfies the Poisson distribution. Zhang et al [35,36] proposed two stochastic programming models to formulate the management problem of global supply chains in the case that product demands are continuous random variables.…”

Section: Vmi System With Random Demandmentioning

confidence: 99%

Partially Smoothing and Gradient-Based Algorithm for Optimizing the VMI System with Competitive Retailers under Random Demands

Deng

Wan

2020

Mathematical Problems in Engineering

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Vendor managed inventory (VMI) is an improved sustainable inventory management system, but it is difficult to establish and solve an integrated Stackelberg game model under the complicated practical environment. In this paper, a bilevel programming model is proposed to formulate the VMI system by taking into account the uncertainty of demand, the competition among retailers, the cooperative advertising, the shortage and holding costs, and the practical constraints. For the established stochastic model being associated with continuously random demands, a deterministic mathematical program with complementarity constraints (MPCC) is first derived by expectation method and the first-order optimality conditions of the lower-level problem. en, with a partially smoothing technique, the MPCC is solved by transforming it into a series of standard smooth optimization subproblems. Finally, owing to complexity caused by evaluating the integrals with unknown decision variables in the objective function, an efficient algorithm is developed to solve the problem based on the gradient information of model. Sensitivity analysis has been employed to reveal a number of managerial implications from the constructed model and algorithm. (1) e participation rate depends on advertising expenditures from both the manufacturer and the retailer. ere exists an optimal threshold of participation rate for the manufacturer, which can be provided by the intersection point of the manufacturer and retailer's costprofit curves. (2) e manufacturer's advertising policy is less sensitive to uncertainty of demand than the change of the retailer's advertising policy. (3) e manufacturer in the VMI system should concern about the differences caused by symmetric or asymmetric retailers.

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“…Both studies were conducted in a dual-channel business environment. Different approaches to the relationship between wholesalers and retailers are described in the study of Haji et al (2018), which tries to determine the appropriate contract design in the management of Vendor Managed Inventory (VMI) and mutually beneficial revenue sharing. Although these studies provide valuable insight into pricing decisions, they are limited to the wholesaler-retailer relationship.…”

Section: Introductionmentioning

confidence: 99%

An agent-based simulation for a trade-off between frequency and depth in retail price promotion strategy

Kurniawan

Arvitrida

2021

Management &Amp; Marketing. Challenges for the Knowledge Society

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A good pricing strategy helps retailers generate profits, increase sales, and set a strategic position in the market. However, the interactions between retailers and customers add complexity to retailer pricing decisions. This study aims to model retail pricing complexity and analyse retail pricing strategies using an agent-based simulation approach. Two types of agents are modelled: customers and retailers. Customer buying decisions are influenced by several customer preferences factors, while product prices are set according to the retailer’s promotion strategy. The promotion is applied based on the frequency and depth of the price cut. A functional product market is considered in this simulation, representing daily necessities that are purchased regularly, such as foodstuffs and toiletries. The results show that the limited rationality and interactions of each agent drive the unique behaviour of the system, and that each pricing strategy has a different impact on retailer profit and market share. This study provides insights into pricing decision strategies related to price promotion.

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Pricing and inventory decisions in a vendor managed inventory system with revenue sharing contract

Cited by 9 publications

References 30 publications

Optimizing service level, price, and inventory decisions for a supply chain with retailers’ competition and cooperation under VMI strategy

Optimizing service level, price, and inventory decisions for a supply chain with retailers’ competition and cooperation under VMI strategy

Partially Smoothing and Gradient-Based Algorithm for Optimizing the VMI System with Competitive Retailers under Random Demands

An agent-based simulation for a trade-off between frequency and depth in retail price promotion strategy

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