Research on the Dynamic Pricing and Capacity Allocation Decisions of a Two-Period Supply Chain: Considering Supply–Demand Imbalance

Wei-Jun Liang (), Xiu-Xia Yan () and Hong-Fei Wang
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Wei-Jun Liang: School of Management, Shandong University of Technology, Zibo 255020, China
Xiu-Xia Yan: School of Management, Shandong University of Technology, Zibo 255020, China
Hong-Fei Wang: School of Management, Shandong University of Technology, Zibo 255020, China

Sustainability, 2024, vol. 16, issue 23, 1-22

Abstract: In order to improve the sustainability of manufacturing enterprises and solve the problem of “excess production capacity in the off-season and insufficient production capacity in the busy season”, this study investigates the optimal practices for supply chain dynamic pricing and capacity co-ordination when there are differences in product cost and product demand during nonbusy seasons, and it proposes the optimal capacity decision-making method for manufacturers. The results show the following: (1) A manufacturer in a high-capacity state has lots of excess capacity, so no strategic inventory co-ordination is required. (2) When a manufacturer is in a medium-capacity state, it can co-ordinate the production capacity in the nonbusy season through capacity allocation, achieve balanced production scheduling, and improve the sustainability of the manufacturer’s operation; the lower the manufacturer’s capacity, the higher the manufacturer’s strategic inventory quantity. (3) When the manufacturer is in a state of low capacity, the manufacturer uses all production capacity but still cannot satisfy off-season and busy season demand at the same time; the manufacturer will reduce product demand by increasing product prices and according to the unit product marginal income of the decision-making capacity allocation in the nonbusy season, the distribution ratio is related to the manufacturer’s capacity and product parameters. (4) Three optimal production capacity decision schemes for manufacturers under different production costs and inventory costs are obtained.

Keywords: two-period supply chain; strategic inventory; low-and-busy season; sustainability (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2024
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