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A Simulation-Based Study on the Optimal Pricing Strategy of Supply Chain System

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  • Yuxian Li

    (School of Economics and Management, Yanshan University, Qinhuangdao 066004, China
    Department of Business and Trade, Qinhuangdao Vocational and Technical College, Qinhuangdao 066100, China)

  • Jiuhe Wang

    (School of Economics and Management, Yanshan University, Qinhuangdao 066004, China)

Abstract

In this paper, the utility function model is applied to study the pricing strategy and order/production strategy of a two-echelon supply chain. Through local point-to-point communication between multi-agents and considering the random communication delay of the system, the utility function is maximized based on the consistency theory, and the optimal price and order quantity are determined. The proposed algorithm is distributed and collaborative, which avoids the centralized demand for all node information and the drawbacks of system paralysis caused by node failure. In addition, we carried out a numerical simulation to verify the theoretical results and demonstrate the effectiveness of the multi-agent consensus theory in the stable operation of supply and demand within a supply chain when there is a random communication delay and the sudden failure of a supply chain enterprise. It further explains how the coefficient of consumer sensitivity to price affects pricing and order/production strategies.

Suggested Citation

  • Yuxian Li & Jiuhe Wang, 2023. "A Simulation-Based Study on the Optimal Pricing Strategy of Supply Chain System," Sustainability, MDPI, vol. 15(14), pages 1-16, July.
    • Handle: RePEc:gam:jsusta:v:15:y:2023:i:14:p:11307-:d:1198487
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    References listed on IDEAS

    as
    1. Xiao, Tiaojun & (Junmin) Shi, Jim, 2016. "Pricing and supply priority in a dual-channel supply chain," European Journal of Operational Research, Elsevier, vol. 254(3), pages 813-823.
    2. R. Canan Savaskan & Shantanu Bhattacharya & Luk N. Van Wassenhove, 2004. "Closed-Loop Supply Chain Models with Product Remanufacturing," Management Science, INFORMS, vol. 50(2), pages 239-252, February.
    3. Tianqin Shi & Dilip Chhajed & Zhixi Wan & Yunchuan Liu, 2020. "Distribution Channel Choice and Divisional Conflict in Remanufacturing Operations," Production and Operations Management, Production and Operations Management Society, vol. 29(7), pages 1702-1719, July.
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