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Title: Optimal inventory replenishment and pricing for a single-manufacturer and multi-retailer system of deteriorating items

Authors: Zhixiang Chen

Addresses: Department of Management Science, School of Business, Sun Yat-Sen University 135, West Xingang Road, Guangzhou 510275, China

Abstract: This paper studies an integrated optimisation model of inventory replenishment and pricing decisions in a single-manufacturer multi-retailer system of deteriorating items. Two meta-heuristic algorithms, i.e., improved particle swarm optimisation incorporated with SA mechanism (SAPSO), and a continuous domain ant colony optimisation algorithm (CDACO) are developed. Experiments show that two algorithms are effective for solving the model; however, SAPSO has higher effectiveness, efficiency and accuracy than CDACO. Sensitivity analysis shows that price elasticity coefficient significantly impacts decisions of production and retailing, giving managerial implication that reducing price fluctuation can increase profit. However, the effect of deterioration of items is not significant both for cost and profit.

Keywords: production-marketing coordination; meta-heuristics; deteriorating items; particle swarm optimisation; ant colony optimisation; ACO.

DOI: 10.1504/IJOR.2018.088559

International Journal of Operational Research, 2018 Vol.31 No.1, pp.112 - 139

Available online: 23 Nov 2017 *

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