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Conditions of reverse bullwhip effect in pricing under joint decision of replenishment and pricing

Ertunga C. Özelkan, Churlzu Lim and Ziaul Haq Adnan

International Journal of Production Economics, 2018, vol. 200, issue C, 207-223

Abstract: A “reverse bullwhip effect in pricing (RBP)” occurs when an amplification of price variability takes place moving from the upstream suppliers to the downstream customers in a supply chain. In this study, we investigate RBP conditions for supply chains where joint replenishment and pricing decisions are made. Commencing with a single-stage supply chain in which a retailer faces a random and price-sensitive demand, we extend the results to a multi-stage supply chain using a leader-follower game theoretical framework. We discuss RBP conditions for supply chains where newsvendor and continuous review inventory policies are employed, and present numerical examples for commonly used demand functions.

Keywords: Pricing; Inventory control; Newsvendor; Continuous review; Bullwhip effect; Supply chain management; Game theory (search for similar items in EconPapers)
Date: 2018
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Handle: RePEc:eee:proeco:v:200:y:2018:i:c:p:207-223