Multi-period price promotions in a single-supplier, multi-retailer supply chain under asymmetric demand information

被引:0
作者
Yiqiang Su
Joseph Geunes
机构
[1] University of Florida,Department of Industrial and Systems Engineering
来源
Annals of Operations Research | 2013年 / 211卷
关键词
Supply chain management; Price promotions; Stackelberg game; Bilinear optimization;
D O I
暂无
中图分类号
学科分类号
摘要
This paper considers a two-stage supply chain in which a supplier serves a set of stores in a retail chain. We consider a two-stage Stackelberg game in which the supplier must set price discounts for each period of a finite planning horizon under uncertainty in retail-store demand. As a mechanism to stimulate sales, the supplier offers periodic off-invoice price discounts to the retail chain. Based on the price discounts offered by the supplier, and after store demand uncertainty is resolved, the retail chain determines individual store order quantities in each period. Because the supplier offers store-specific prices, the retailer may ship inventory between stores, a practice known as diverting. We demonstrate that, despite the resulting bullwhip effect and associated costs, a carefully designed price promotion scheme can improve the supplier’s profit when compared to the case of everyday low pricing (EDLP). We model this problem as a stochastic bilevel optimization problem with a bilinear objective at each level and with linear constraints. We provide an exact solution method based on a Reformulation-Linearization Technique (RLT). In addition, we compare our solution approach with a widely used heuristic and another exact solution method developed by Al-Khayyal (Eur. J. Oper. Res. 60(3):306–314, 1992) in order to benchmark its quality.
引用
收藏
页码:447 / 472
页数:25
相关论文
共 67 条
  • [21] Neslin S. A.(1995)The effects of retailer and consumer response on optimal manufacturer advertising and trade promotion strategies Management Science 41 749-766
  • [22] Blattberg R. C.(2011)Robust approximate bilinear programming for value function approximation Journal of Machine Learning Research 12 3027-3063
  • [23] Eppen G. D.(1999)Pricing and the newsvendor problem: a review with extensions Operations Research 47 183-194
  • [24] Lieberman J.(1992)A new reformulation-linearization technique for bilinear programming problems Journal of Global Optimization 2 379-410
  • [25] Bronnenberg B. J.(1980)A finitely convergent algorithm for bilinear programming problems using polar cuts and disjunctive face cuts Mathematical Programming 19 14-31
  • [26] Dhar S. K.(1993)A modeling framework for coordinating promotion and production decisions within a firm Management Science 39 191-203
  • [27] Dubé J. P.(1975)A dynamic, nonstationary inventory problem for a price/quantity setting firm Naval Research Logistics Quarterly 22 461-476
  • [28] Cheng F.(2008)Incorporating manufacturing lead times in joint production-marketing models: a review and some future directions Annals of Operations Research 161 171-188
  • [29] Sethi S. P.(1992)Generation of disjointly constrained bilinear programming test problems Computational Optimization and Applications 1 299-306
  • [30] Desai V. S.(1991)Linear bi-level programming problems–a review Journal of the Operational Research Society 42 125-133