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Modelling shipment consolidation and pricing decisions for a manufacturer-distributor

Author

Listed:
  • M. Ali Ãœlkü
  • James H. Bookbinder

Abstract

Consider a supply chain with one vendor and multiple buyers. That vendor not only manufactures the goods demanded, but also transports them by its own fleet of trucks to buyers that are densely dispersed in a distribution zone. The buyers are sensitive to both price and delivery-time guarantee. We model and maximise the vendors expected profit rate when the prices charged depend on the arrival times of orders. The optimal profit rate is found to be concave in the vehicle capacity. We illustrate our theoretical findings with numerical examples and sensitivity analyses to furnish managerial insights.

Suggested Citation

  • M. Ali Ãœlkü & James H. Bookbinder, 2012. "Modelling shipment consolidation and pricing decisions for a manufacturer-distributor," International Journal of Revenue Management, Inderscience Enterprises Ltd, vol. 6(1/2), pages 62-76.
    • Handle: RePEc:ids:ijrevm:v:6:y:2012:i:1/2:p:62-76
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    Citations

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    Cited by:

    1. Zhang, Jian & Nault, Barrie R. & Tu, Yiliu, 2015. "A dynamic pricing strategy for a 3PL provider with heterogeneous customers," International Journal of Production Economics, Elsevier, vol. 169(C), pages 31-43.
    2. Jana Ralfs & Gudrun P. Kiesmüller, 2022. "Inventory management with advance demand information and flexible shipment consolidation," OR Spectrum: Quantitative Approaches in Management, Springer;Gesellschaft für Operations Research e.V., vol. 44(4), pages 1009-1044, December.
    3. Konur, Dinçer & Toptal, Ayşegül, 2012. "Analysis and applications of replenishment problems under stepwise transportation costs and generalized wholesale prices," International Journal of Production Economics, Elsevier, vol. 140(1), pages 521-529.
    4. Berling, Peter & Eng-Larsson, Fredrik, 2016. "Pricing and timing of consolidated deliveries in the presence of an express alternative: Financial and environmental analysis," European Journal of Operational Research, Elsevier, vol. 250(2), pages 590-601.
    5. van Ooijen, Henny & Bertrand, J. Will M. & Buyukkaramikli, Nasuh C., 2019. "Coordinating failed goods collecting and repair capacity policies in the maintenance of commoditized capital goods," International Journal of Production Economics, Elsevier, vol. 208(C), pages 29-42.
    6. Ke, Ginger Y. & Bookbinder, James H., 2018. "Coordinating the discount policies for retailer, wholesaler, and less-than-truckload carrier under price-sensitive demand: A tri-level optimization approach," International Journal of Production Economics, Elsevier, vol. 196(C), pages 82-100.

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