TY - JOUR
T1 - An integrated pricing and deteriorating model and a hybrid algorithm for a VMI (vendor-managed-inventory) supply chain
AU - Yu, Yugang
AU - Huang, George Q.
AU - Hong, Zhaofu
AU - Zhang, Xiandong
N1 - Funding Information:
Manuscript received January 02, 2011; accepted March 25, 2011. Date of publication May 02, 2011; date of current version October 05, 2011. This paper was recommended for publication by Associate Editor S. G. Ponnambalam and Editor Y. Narahari upon evaluation of the reviewers’ comments. This work was supported by the Grant of One-Hundred Talents Program from the Chinese Academy of Sciences, the grant for National Outstanding Young Researchers (NWO VENI #451-07-017) in the Netherlands, and in part by the National Sciene Foundation of China (NSFC) under Grants 70821001, 70501027, Grant 71090401/71090400), and the Fundamental Research Funds for the Central Universities under Grant 10LZUJBWZY080.
PY - 2011/10
Y1 - 2011/10
N2 - This paper studies a vendor-managed-inventory (VMI) supply chain where a manufacturer, as a vendor, procures a type of nondeteriorating raw material to produce a deteriorating product, and distribute it to multiple retailers. The price of the product offered by one retailer is also influenced by the prices offered by other retailers because consumers can choose the product from any of the retailers. This paper is one of the first papers that propose an integrated model to study the influence of pricing and deterioration on the profit of such a VMI system. A hybrid approach combining genetic algorithms and an analytical method is developed for efficiently determining the optimal price of the product of each retailer, the inventory policies of the product and the raw material. Our results of a detailed numerical study show that parameters related to the market and deterioration have significant influences on the profit of the VMI system. However, different from common intuition, we find that an increase in the substitution elasticity of the product among different retailers can bring an increase in the retail prices of the product, while the increase of the market scale can reduce the retail prices.
AB - This paper studies a vendor-managed-inventory (VMI) supply chain where a manufacturer, as a vendor, procures a type of nondeteriorating raw material to produce a deteriorating product, and distribute it to multiple retailers. The price of the product offered by one retailer is also influenced by the prices offered by other retailers because consumers can choose the product from any of the retailers. This paper is one of the first papers that propose an integrated model to study the influence of pricing and deterioration on the profit of such a VMI system. A hybrid approach combining genetic algorithms and an analytical method is developed for efficiently determining the optimal price of the product of each retailer, the inventory policies of the product and the raw material. Our results of a detailed numerical study show that parameters related to the market and deterioration have significant influences on the profit of the VMI system. However, different from common intuition, we find that an increase in the substitution elasticity of the product among different retailers can bring an increase in the retail prices of the product, while the increase of the market scale can reduce the retail prices.
KW - Deteriorating rate
KW - inventory
KW - pricing
KW - supply chain
KW - vendor managed inventory
UR - http://www.scopus.com/inward/record.url?scp=80053646827&partnerID=8YFLogxK
U2 - 10.1109/TASE.2011.2140371
DO - 10.1109/TASE.2011.2140371
M3 - Journal article
AN - SCOPUS:80053646827
SN - 1545-5955
VL - 8
SP - 673
EP - 682
JO - IEEE Transactions on Automation Science and Engineering
JF - IEEE Transactions on Automation Science and Engineering
IS - 4
M1 - 5759725
ER -