Integrated pricing and lot-sizing decisions in a serial supply chain

Hamza Adeinat, Jose Antonio Ventura

Research output: Contribution to journalArticle

3 Citations (Scopus)

Abstract

In this article, we consider a serial supply chain controlled by a decision-maker who is responsible for deciding the amount of raw material to order from the selected suppliers, the amount of product to transfer between consecutive stages in order to avoid any inventory shortages, and the final product's selling price so that the profit per time unit is maximized. Coordinating all these decisions simultaneously is a topic that has been neglected in literature. This integrated process is modeled as a mixed-integer nonlinear programming model. In addition, the model requires the order quantity received from each selected supplier to be an integer multiple of the order quantity delivered to the following stage, which means that a different multiplicative factor can be assigned to each supplier. This coordination mechanism shows an improvement in the objective function compared to existing models that assign the same multiplicative factor to each selected supplier. Moreover, we develop a heuristic algorithm that generates near optimal solutions in a timely manner. Two numerical examples are presented to illustrate the proposed model and the heuristic algorithm.

Original language English (US) 429-445 17 Applied Mathematical Modelling 54 https://doi.org/10.1016/j.apm.2017.09.044 Published - Feb 1 2018

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Lot Sizing
Supply Chain
Supply chains
Pricing
Heuristic algorithm
Multiplicative
Heuristic algorithms
Costs
Mixed Integer Nonlinear Programming
Integrated Process
Shortage
Programming Model
Nonlinear Model
Profit
Assign
Consecutive
Nonlinear programming
Objective function
Optimal Solution
Model

All Science Journal Classification (ASJC) codes

• Modeling and Simulation
• Applied Mathematics

Cite this

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In: Applied Mathematical Modelling, Vol. 54, 01.02.2018, p. 429-445.

Research output: Contribution to journalArticle

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