The application of the logit demand function in a joint pricing and inventory replenishment model with multiple suppliers

Lisha Duan, José A. Ventura, Bárbara B. Venegas, Xin Li

Research output: Contribution to conferencePaperpeer-review

Abstract

We investigate a joint pricing, supplier selection, and inventory replenishment problem for a single item in a two-stage system, where multiple suppliers and one retailer are considered. Each supplier features certain capacity and quality level. Multiple orders may be placed to potential suppliers within a repeating order cycle. The demand is deterministic and sensitive to the selling price set by the retailer, which can be modeled using the logit function. In this context, we develop a mathematical model to find optimal solutions for the selling price and inventory replenishment policy, including the set of selected suppliers, order frequency, and order quantity. We further adopt a piecewise linear approximation technique to simplify the model. A numerical example is then presented to illustrate the results of the proposed model and algorithm.

Original languageEnglish (US)
Pages937-942
Number of pages6
StatePublished - Jan 1 2018
Event2018 Institute of Industrial and Systems Engineers Annual Conference and Expo, IISE 2018 - Orlando, United States
Duration: May 19 2018May 22 2018

Other

Other2018 Institute of Industrial and Systems Engineers Annual Conference and Expo, IISE 2018
CountryUnited States
CityOrlando
Period5/19/185/22/18

All Science Journal Classification (ASJC) codes

  • Control and Systems Engineering
  • Industrial and Manufacturing Engineering

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