Risk pooling strategy in a multi-echelon supply chain with price-sensitive demand

Yue Dai (), Shu-Cherng Fang (), Xiaoli Ling () and Henry Nuttle ()

Mathematical Methods of Operations Research, 2008, vol. 67, issue 3, 421 pages

Abstract: This paper studies a nonstationary inventory and pricing problem. We consider a two-echelon supply chain with one supplier and two retailers, in which the supplier carries all inventory to supply the retailers. Both the reserved and pooled inventory systems are analyzed. Results with normally distributed demands are compared. Assuming the random demand at each retailer is price-sensitive, we further consider the cases when the retailers have and do not have service level requirements. We start with analyzing inventory and pricing strategies for the supplier in a one-period scenario. Then we extend our analysis to both the backlogging and lost-sale scenarios in an infinite planning horizon. Copyright Springer-Verlag 2008

Keywords: Supply chain; Pooled inventory system; Reserved inventory system; Pricing (search for similar items in EconPapers)
Date: 2008
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DOI: 10.1007/s00186-007-0203-8

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