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Integrated Dynamic Pricing and Ordering in a Supply Chain With Demand Learning

Piri, Saeed | 2011

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  1. Type of Document: M.Sc. Thesis
  2. Language: Farsi
  3. Document No: 41591 (01)
  4. University: Sharif University of Technology
  5. Department: Industrial Engineering
  6. Advisor(s): Modarres Yazdi, Mohammad
  7. Abstract:
  8. In this study, four pricing models in a supply chain are developed. The first model includes a retailer. The second model also includes a retailer. However in this model we apply the learning technique to update the stochastic demand. In the third model, we consider a supply chain consisting of a retailer and a manufacturer. Finally, in the fourth model we consider a supply chain consisting of a retailer and a manufacturer and like the second model; we apply the learning technique to update the stochastic demand. In all models we assume that a single product is sold in a monopoly market. In this study we seek to simultaneously determine decisions about production, pricing and ordering to optimize and maximize the total supply chain profits. The planning horizon is divided into limited periods. The retail price and inventory level are reviewed periodically. In each period by using dynamic programming approach, optimal pricing and ordering decisions are determined simultaneously. Retailer warehouse capacity is limited so there is an upper bound for ordering quantity. Demand function includes two parts. The first part is deterministic and is a function of price and time. The second part is stochastic with a known distribution but with an unknown parameter (or unknown parameters).Demand linearly decreases when price increases and by passing time it increases or decreases exponentially, according to the type and nature of goods. In this study a computational study is also carried out in order to find out the circumstances under which learning is most beneficial.

  9. Keywords:
  10. Pricing ; Supply Chain ; Dynamic Programming ; Ordering ; Demand Learning

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