Optimal dynamic policies for integrated production and marketing planning in business-to-business marketplaces

Liang-Tu Chen

International Journal of Production Economics, 2014, vol. 153, issue C, 46-53

Abstract: This work develops optimal dynamic policies for integrated production and marketing planning in a vertically decentralized single-manufacturer and single-retailer channel over a multi-period planning horizon, subject to deteriorating goods and a multivariate demand function. This work formulates the discount profit maximization problem, and provides inter-enterprise dynamic joint decisions for retail price and replenishment schedule/quantity using a calculus-based formulation combined with dynamic programming. Additionally, two alternatives for doing business, namely, retailer-managed inventory with a price-only contract and vendor-managed inventory (VMI) with a consignment contract, are applied to business-to-business traditional marketplaces (TMs) and electronic marketplaces (EMs), respectively. Numerical results demonstrate that solutions generated in EMs outperform those in TMs in terms of maximizing channel-wide total discount profits and those of manufacturer and retailer. Further, analytical results show that the proposed policy under VMI with a consignment contract in EMs significantly increases system efficiency and simultaneously achieves Pareto improvements using an extra one-part tariff for the decentralized channel.

Keywords: Production and marketing integration; Business-to-business; E-marketplaces (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:153:y:2014:i:c:p:46-53

DOI: 10.1016/j.ijpe.2014.04.002

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