IDEAS home Printed from https://ideas.repec.org/a/eee/proeco/v153y2014icp46-53.html
   My bibliography  Save this article

Optimal dynamic policies for integrated production and marketing planning in business-to-business marketplaces

Author

Listed:
  • Chen, Liang-Tu

Abstract

This work develops optimal dynamic policies for integrated production and marketing planning in a vertically decentralized single-manufacturer and single-retailer channel over a multi-period planning horizon, subject to deteriorating goods and a multivariate demand function. This work formulates the discount profit maximization problem, and provides inter-enterprise dynamic joint decisions for retail price and replenishment schedule/quantity using a calculus-based formulation combined with dynamic programming. Additionally, two alternatives for doing business, namely, retailer-managed inventory with a price-only contract and vendor-managed inventory (VMI) with a consignment contract, are applied to business-to-business traditional marketplaces (TMs) and electronic marketplaces (EMs), respectively. Numerical results demonstrate that solutions generated in EMs outperform those in TMs in terms of maximizing channel-wide total discount profits and those of manufacturer and retailer. Further, analytical results show that the proposed policy under VMI with a consignment contract in EMs significantly increases system efficiency and simultaneously achieves Pareto improvements using an extra one-part tariff for the decentralized channel.

Suggested Citation

  • Chen, Liang-Tu, 2014. "Optimal dynamic policies for integrated production and marketing planning in business-to-business marketplaces," International Journal of Production Economics, Elsevier, vol. 153(C), pages 46-53.
  • Handle: RePEc:eee:proeco:v:153:y:2014:i:c:p:46-53
    DOI: 10.1016/j.ijpe.2014.04.002
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0925527314001078
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. E. Andrew Boyd & Ioana C. Bilegan, 2003. "Revenue Management and E-Commerce," Management Science, INFORMS, vol. 49(10), pages 1363-1386, October.
    2. Qrunfleh, Sufian & Tarafdar, Monideepa, 2014. "Supply chain information systems strategy: Impacts on supply chain performance and firm performance," International Journal of Production Economics, Elsevier, vol. 147(PB), pages 340-350.
    3. Papachristos, S. & Skouri, K., 2003. "An inventory model with deteriorating items, quantity discount, pricing and time-dependent partial backlogging," International Journal of Production Economics, Elsevier, vol. 83(3), pages 247-256, March.
    4. Kamran Moinzadeh, 2002. "A Multi-Echelon Inventory System with Information Exchange," Management Science, INFORMS, vol. 48(3), pages 414-426, March.
    5. Jayashankar M. Swaminathan & Sridhar R. Tayur, 2003. "Models for Supply Chains in E-Business," Management Science, INFORMS, vol. 49(10), pages 1387-1406, October.
    6. Mandal, Purnendu & Gunasekaran, A., 2002. "Application of SAP R/3 in on-line inventory control," International Journal of Production Economics, Elsevier, vol. 75(1-2), pages 47-55, January.
    7. Wang, Charles X. & Benaroch, Michel, 2004. "Supply chain coordination in buyer centric B2B electronic markets," International Journal of Production Economics, Elsevier, vol. 92(2), pages 113-124, November.
    8. Abad, P. L., 2003. "Optimal pricing and lot-sizing under conditions of perishability, finite production and partial backordering and lost sale," European Journal of Operational Research, Elsevier, vol. 144(3), pages 677-685, February.
    9. Wu, Ing-Long & Chuang, Cheng-Hung & Hsu, Chien-Hua, 2014. "Information sharing and collaborative behaviors in enabling supply chain performance: A social exchange perspective," International Journal of Production Economics, Elsevier, vol. 148(C), pages 122-132.
    10. Hausen, Tobias & Fritz, Melanie & Schiefer, Gerhard, 2006. "Potential of electronic trading in complex supply chains: An experimental study," International Journal of Production Economics, Elsevier, vol. 104(2), pages 580-597, December.
    11. P. L. Abad, 1996. "Optimal Pricing and Lot-Sizing Under Conditions of Perishability and Partial Backordering," Management Science, INFORMS, vol. 42(8), pages 1093-1104, August.
    12. Urban, Timothy L. & Baker, R. C., 1997. "Optimal ordering and pricing policies in a single-period environment with multivariate demand and markdowns," European Journal of Operational Research, Elsevier, vol. 103(3), pages 573-583, December.
    13. Wee, Hui-Ming, 1995. "Joint pricing and replenishment policy for deteriorating inventory with declining market," International Journal of Production Economics, Elsevier, vol. 40(2-3), pages 163-171, August.
    14. Lau, Amy Hing Ling & Lau, Hon-Shiang, 2003. "Effects of a demand-curve's shape on the optimal solutions of a multi-echelon inventory/pricing model," European Journal of Operational Research, Elsevier, vol. 147(3), pages 530-548, June.
    15. Stephen A. Smith & Dale D. Achabal, 1998. "Clearance Pricing and Inventory Policies for Retail Chains," Management Science, INFORMS, vol. 44(3), pages 285-300, March.
    16. Dejonckheere, J. & Disney, S. M. & Lambrecht, M. R. & Towill, D. R., 2004. "The impact of information enrichment on the Bullwhip effect in supply chains: A control engineering perspective," European Journal of Operational Research, Elsevier, vol. 153(3), pages 727-750, March.
    17. Gunasekaran, A. & Marri, H. B. & McGaughey, R. E. & Nebhwani, M. D., 2002. "E-commerce and its impact on operations management," International Journal of Production Economics, Elsevier, vol. 75(1-2), pages 185-197, January.
    18. Al-Mashari, Majed & Al-Mudimigh, Abdullah & Zairi, Mohamed, 2003. "Enterprise resource planning: A taxonomy of critical factors," European Journal of Operational Research, Elsevier, vol. 146(2), pages 352-364, April.
    19. Schonberger, Richard J., 1996. "Strategic collaboration: Breaching the castle walls," Business Horizons, Elsevier, vol. 39(2), pages 20-26.
    20. Wee, Hui-Ming & Law, Sh-Tyan, 2001. "Replenishment and pricing policy for deteriorating items taking into account the time-value of money," International Journal of Production Economics, Elsevier, vol. 71(1-3), pages 213-220, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. J-M Chen & L-T Chen, 2004. "Pricing and lot-sizing for a deteriorating item in a periodic review inventory system with shortages," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 55(8), pages 892-901, August.
    2. Pentico, David W. & Drake, Matthew J., 2011. "A survey of deterministic models for the EOQ and EPQ with partial backordering," European Journal of Operational Research, Elsevier, vol. 214(2), pages 179-198, October.
    3. Lo, Sh-Tyan & Wee, Hui-Ming & Huang, Wen-Chang, 2007. "An integrated production-inventory model with imperfect production processes and Weibull distribution deterioration under inflation," International Journal of Production Economics, Elsevier, vol. 106(1), pages 248-260, March.
    4. San José, L.A. & Sicilia, J. & Garcia-Laguna, J., 2006. "Analysis of an inventory system with exponential partial backordering," International Journal of Production Economics, Elsevier, vol. 100(1), pages 76-86, March.
    5. Bakker, Monique & Riezebos, Jan & Teunter, Ruud H., 2012. "Review of inventory systems with deterioration since 2001," European Journal of Operational Research, Elsevier, vol. 221(2), pages 275-284.
    6. Teng, Jinn-Tsair & Ouyang, Liang-Yuh & Chen, Liang-Ho, 2007. "A comparison between two pricing and lot-sizing models with partial backlogging and deteriorated items," International Journal of Production Economics, Elsevier, vol. 105(1), pages 190-203, January.
    7. Arshinder & Kanda, Arun & Deshmukh, S.G., 2008. "Supply chain coordination: Perspectives, empirical studies and research directions," International Journal of Production Economics, Elsevier, vol. 115(2), pages 316-335, October.
    8. Prashant Chintapalli, 2015. "Simultaneous pricing and inventory management of deteriorating perishable products," Annals of Operations Research, Springer, vol. 229(1), pages 287-301, June.
    9. Lodree, Emmett Jr., 2007. "Advanced supply chain planning with mixtures of backorders, lost sales, and lost contract," European Journal of Operational Research, Elsevier, vol. 181(1), pages 168-183, August.
    10. Cai, Gangshu (George) & Chiang, Wen-Chyuan & Chen, Xiangfeng, 2011. "Game theoretic pricing and ordering decisions with partial lost sales in two-stage supply chains," International Journal of Production Economics, Elsevier, vol. 130(2), pages 175-185, April.
    11. Joaquín Sicilia & Luis San-José & Juan García-Laguna, 2012. "An inventory model where backordered demand ratio is exponentially decreasing with the waiting time," Annals of Operations Research, Springer, vol. 199(1), pages 137-155, October.
    12. repec:spr:compst:v:72:y:2010:i:1:p:107-127 is not listed on IDEAS
    13. Roy, Arindam & kar, Samarjit & Maiti, Manoranjan, 2010. "A volume flexible production-policy for randomly deteriorating item with trended demand and shortages," International Journal of Production Economics, Elsevier, vol. 128(1), pages 188-199, November.
    14. Pal, Brojeswar & Sana, Shib Sankar & Chaudhuri, Kripasindhu, 2014. "Joint pricing and ordering policy for two echelon imperfect production inventory model with two cycles," International Journal of Production Economics, Elsevier, vol. 155(C), pages 229-238.
    15. Hyun Jung Kim, 0. "Information technology and firm performance: the role of supply chain integration," Operations Management Research, Springer, vol. 0, pages 1-9.
    16. Ray, Saibal & Gerchak, Yigal & Jewkes, Elizabeth M., 2005. "Joint pricing and inventory policies for make-to-stock products with deterministic price-sensitive demand," International Journal of Production Economics, Elsevier, vol. 97(2), pages 143-158, August.
    17. Prajogo, Daniel & Olhager, Jan, 2012. "Supply chain integration and performance: The effects of long-term relationships, information technology and sharing, and logistics integration," International Journal of Production Economics, Elsevier, vol. 135(1), pages 514-522.
    18. Rodríguez, Betzabé & Aydın, Göker, 2015. "Pricing and assortment decisions for a manufacturer selling through dual channels," European Journal of Operational Research, Elsevier, vol. 242(3), pages 901-909.
    19. Hyun Jung Kim, 2017. "Information technology and firm performance: the role of supply chain integration," Operations Management Research, Springer, vol. 10(1), pages 1-9, June.
    20. Chang, Horng-Jinh & Teng, Jinn-Tsair & Ouyang, Liang-Yuh & Dye, Chung-Yuan, 2006. "Retailer's optimal pricing and lot-sizing policies for deteriorating items with partial backlogging," European Journal of Operational Research, Elsevier, vol. 168(1), pages 51-64, January.
    21. Fleischmann, M. & Hall, J.M. & Pyke, D.F., 2005. "A Dynamic Pricing Model for Coordinated Sales and Operations," ERIM Report Series Research in Management ERS-2005-074-LIS, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:proeco:v:153:y:2014:i:c:p:46-53. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Nithya Sathishkumar). General contact details of provider: http://www.elsevier.com/locate/ijpe .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.