Integration of pricing and inventory decisions of deteriorating item in a decentralized supply chain: a Stackelberg-game approach

Rubi Das (), Abhijit Barman () and Pijus Kanti De ()
Additional contact information
Rubi Das: National Institute of Technology Silchar
Abhijit Barman: National Institute of Technology Silchar
Pijus Kanti De: National Institute of Technology Silchar

International Journal of System Assurance Engineering and Management, 2022, vol. 13, issue 1, No 35, 479-493

Abstract: Abstract In the present worldwide highly competitive markets, competition occurs among the supply chain members on behalf of organizations. In this way, partners of the supply chain try to apply effective coordination to increase market shares. Because of the significance and utilization of inventory decisions and pricing strategies on accepting a product in the current business scenario, in this study, decentralized channel coordination is generalized to increase the profitability of a two-echelon supply chain. Here, a one-manufacturer–one-retailer supply chain mechanism for the deteriorating product with a leader–follower relationship under price-dependent demand is developed. Up-stream member-manufacturer sells the on-hand item to the downstream member-retailer in which the retailer faces off the customer. This model considers the effect of the deterioration of the product, selling price of both the channel members, cycle duration, idle time, ordering lot size in a decentralized supply chain system. The Stackelberg game method has been used considering the retailer as a leader and manufacturer as a follower to optimize the sales price of channel members and time–length up to zero manufacturer inventory for maximum profit. Finally, a numerical example and sensitivity analysis are given to demonstrate the model. The result shows that manufacturer profit is far better than the retailer profit though the retailer’s selling price is higher than that of the manufacturer’s selling price. Also, a little change in the manufacturing cost is highly sensitive for the profit of the channel members, which encourages the manufacturer to reduce the manufacturing cost and increases supply chain profit as well as channel members profit.

Keywords: Inventory; Deterioration; Supply chain; Stackelberg game; Price-sensitive demand (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://link.springer.com/10.1007/s13198-021-01299-1 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:ijsaem:v:13:y:2022:i:1:d:10.1007_s13198-021-01299-1

Ordering information: This journal article can be ordered from
http://www.springer.com/engineering/journal/13198

DOI: 10.1007/s13198-021-01299-1

Access Statistics for this article

International Journal of System Assurance Engineering and Management is currently edited by P.K. Kapur, A.K. Verma and U. Kumar

More articles in International Journal of System Assurance Engineering and Management from Springer, The Society for Reliability, Engineering Quality and Operations Management (SREQOM),India, and Division of Operation and Maintenance, Lulea University of Technology, Sweden
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().