Sale price decision in the supply chain of one product family with linear price-dependent demand Online publication date: Wed, 19-Nov-2008
by Li Qian
International Journal of Services Operations and Informatics (IJSOI), Vol. 3, No. 3/4, 2008
Abstract: In response to different customer preferences, manufacturers add numerous product variants to compose one product family. Some components in one product family can be shared for time and cost reduction. The paper provides mathematical models for the sale price decision in the multistage supply chain of one product family under the stochastic and price-dependent demand environment. With proposed models and one specific case, the paper studies how different decision-making leaders including the manufacturer, the retailer or both with negotiation on the profit sharing rate, how different linear price-demand functions and how component commonality affect the sale price decision and the supply chain performance in profit. Results show that the quality of price-dependent demand information available at the decision maker has a significant impact on the supply chain performance in profit. Procedure cost reduces and quantity discount of sharing components could benefit the retailer, the manufacturer and customers.
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