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Coordination by contract for capacity and price decisions considering stochastic and price-dependent demand settings

Pezeshki, Y ; Sharif University of Technology | 2011

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  1. Type of Document: Article
  2. Publisher: 2011
  3. Abstract:
  4. In this paper, we investigate the simultaneous coordination of price and capacity building decision in a dyadic supply chain which is in the context of capacity reservation problem. While the coordination in this context with stochastic demand and fixed price has been received much attention in the literature, but the price-dependent and stochastic demand has been less considered. There is a price-setting buyer which faces a linear decreasing demand with respect to price. To capture the uncertainty nature of the demand we add a stochastic variable to the demand function. In addition, we incorporate production time and inventory cost in supplier side. We study the model in both additive and multiplicative demand settings. To improve the efficiency, we propose a contract as a coordination mechanism to align the price and capacity decisions
  5. Keywords:
  6. Capacity ; Capacity building ; Capacity decisions ; Capacity reservation ; Coordination mechanisms ; Price-dependent demand ; Stochastic variable ; Supply chain coordination ; Contracts ; Functions ; Industrial engineering ; Supply chains ; Costs
  7. Source: 41st International Conference on Computers and Industrial Engineering 2011, 23 October 2011 through 25 October 2011 ; 2011 , Pages 323-329 ; 9781627486835 (ISBN)