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Joint pricing and inventory strategies in a supply chain subject to inventory inaccuracy

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  • Feng Tao
  • Tijun Fan
  • Yao-Yu Wang
  • Kin Keung Lai

Abstract

This paper focuses on pricing strategies, inventory policies for a supply chain when Radio Frequency Identification (RFID) technology is adopted to cope with inventory inaccuracy. The supply chain consists of one supplier and one retailer, in which the RFID tag price is shared between the supplier and the retailer. We present and compare the performance differences between a wholesale price contract and a consignment contract when the retailer is the Stackelberg leader and the supplier is the follower. Based on the optimal pricing and inventory decisions, an interesting observation of contract selection is that there are two critical values of inventory available rate such that when the inventory availability is less than the lower value, both the supplier and the retailer prefer a consignment contract; when the inventory availability is greater than the upper value, a wholesale price contract is their best choice; when the inventory availability is between the two values, the supplier prefers a wholesale price contract and the retailer prefers a consignment contract. Additionally, there exist threshold values of RFID tag price and sharing rate to determine the contract preference for the retailer. Furthermore, the profits of both the supplier and the retailer are independent of the RFID tag price sharing rate in a wholesale price contract, and the supplier has the incentive to invest in RFID tag cost in a consignment contract.

Suggested Citation

  • Feng Tao & Tijun Fan & Yao-Yu Wang & Kin Keung Lai, 2019. "Joint pricing and inventory strategies in a supply chain subject to inventory inaccuracy," International Journal of Production Research, Taylor & Francis Journals, vol. 57(9), pages 2695-2714, May.
    • Handle: RePEc:taf:tprsxx:v:57:y:2019:i:9:p:2695-2714
    DOI: 10.1080/00207543.2019.1579933
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    Citations

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    Cited by:

    1. Feng Tao & Yanhong Xie & Yao-Yu Wang & Fujun Lai & Kin Keung Lai, 2022. "Contract strategies in competitive supply chains subject to inventory inaccuracy," Annals of Operations Research, Springer, vol. 309(2), pages 641-661, February.
    2. Vimal K.E.K & Simon Peter Nadeem & Mahadharsan Ravichandran & Manavalan Ethirajan & Jayakrishna Kandasamy, 2022. "Resilience strategies to recover from the cascading ripple effect in a copper supply chain through project management," Operations Management Research, Springer, vol. 15(1), pages 440-460, June.
    3. Maryam Shoaeinaeini & Kannan Govindan & Donya Rahmani, 2022. "Pricing policy in green supply chain design: the impact of consumer environmental awareness and green subsidies," Operational Research, Springer, vol. 22(4), pages 3989-4028, September.
    4. Yang, Huixiao & Chen, Wenbo, 2020. "Game modes and investment cost locations in radio-frequency identification (RFID) adoption," European Journal of Operational Research, Elsevier, vol. 286(3), pages 883-896.
    5. Syed Asif Raza, 2022. "A bibliometric analysis of pricing models in supply chain," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 21(2), pages 228-251, April.

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