A mutual beneficial pricing strategy of an integrated vendor-buyers inventory system |
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Authors: | H M Wee P C Yang |
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Affiliation: | (1) Industrial Engineering Department, Chung Yuan Christian University, Chungli, Taiwan, 32023, People’ Republic of China;(2) Industrial Engineering and Management Department, St. John’s University, Tamsui, Taipei, 25135, People’ Republic of China |
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Abstract: | This study develops an optimal pricing and replenishment policies in a “leagile” (lean and agile) supply chain system for
a single vendor and multiple buyers. Since it benefits the vendor more than the buyers in the integrated system, a pricing
strategy with price reduction is incorporated to entice the buyers to accept the minimum total cost integrated system. Negotiation
factors are incorporated to balance the cost saving between the players. A numerical example with sensitivity analysis is
provided to demonstrate the theory and the cost savings when integration is considered. The price reduction mechanism is a
mutual beneficial strategic partnership between the vendor and the buyers. |
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Keywords: | Integrated system Price reduction Single vendor Multiple buyers |
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