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A two-price policy for a newsvendor product supply chain with time and price sensitive demand

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  • Jadidi, Omid
  • Taghipour, Sharareh
  • Zolfaghari, Saeed

Abstract

In technology-related industries, such as smartphones manufacturing, two phenomena can be observed for the products: the first is the obsolescence of an existing product, usually due to the appearance of a new product which decreases the attractiveness of the existing one; the second is the stochastic nature of the market demand and its price sensitivity. These two imply that the demand decreases over a product's lifecycle, and thus, the manufacturer and/or retailer may need to decline the retail price of the product during its lifecycle. In this paper, we assume that a dominant manufacturer wholesales a technological product to a retailer who has single or two buying opportunities. For either single- or two-buying-opportunity setting, we consider two models: (1) the retailer decreases the retail price at the product's midlife with no compensation from the manufacturer; (2) the manufacturer provides a rebate to the retailer for the retail price decline at the midlife. For the two-buying-opportunity setting, the rebate is that the manufacturer decreases the wholesale price at the midlife. The variables include the manufacturer's wholesale price and rebate, the retailer's order quantities and retail prices. We also compare the performance of the proposed models to the wholesale-price-only and the buyback policies.

Suggested Citation

  • Jadidi, Omid & Taghipour, Sharareh & Zolfaghari, Saeed, 2016. "A two-price policy for a newsvendor product supply chain with time and price sensitive demand," European Journal of Operational Research, Elsevier, vol. 253(1), pages 132-143.
    • Handle: RePEc:eee:ejores:v:253:y:2016:i:1:p:132-143
    DOI: 10.1016/j.ejor.2016.02.033
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    Cited by:

    1. Bieniek, Milena, 2021. "The ubiquitous nature of inventory: Vendor Managed Consignment Inventory in adverse market conditions," European Journal of Operational Research, Elsevier, vol. 291(2), pages 411-420.
    2. Ata Allah Taleizadeh & Kannan Govindan & Nasim Ebrahimi, 2020. "The effect of promotional cost sharing on the decisions of two-level supply chain with uncertain demand," Annals of Operations Research, Springer, vol. 290(1), pages 747-781, July.
    3. Omid Jadidi & Fatemeh Firouzi & John S. Loucks & Yong Shin Park, 2022. "Multi-criteria supplier selection problem with fuzzy demand: a newsvendor model," Computational Management Science, Springer, vol. 19(3), pages 375-394, July.
    4. Sainathan, Arvind & Groenevelt, Harry, 2019. "Vendor managed inventory contracts – coordinating the supply chain while looking from the vendor’s perspective," European Journal of Operational Research, Elsevier, vol. 272(1), pages 249-260.
    5. Ling Zhao & Anquan Zou & Pin Zhou, 2023. "E‐retailer's dynamic inventory and pricing policy with price‐protection services," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(1), pages 490-501, January.
    6. Mitra, Subrata, 2018. "Newsvendor problem with clearance pricing," European Journal of Operational Research, Elsevier, vol. 268(1), pages 193-202.

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