Integrating pricing and coordinated inventory decisions between one warehouse and multiple retailers

Juan Güiza, Rafael Luque, Jennifer Murillo, Rodrigo Romero, David Barrera*, Héctor López-Ospina

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

4 Scopus citations

Abstract

This paper studies integration between pricing and coordinated inventory decisions for a two-echelon supply chain in a competitive environment. To the best of our knowledge, these problems have traditionally been solved separately. Therefore, we aim to support the decision-making process by following an integrated approach. First, we develop a novel mathematical model that coordinates inventory policies between one warehouse and N retailers and determines the selling price using multinomial logit (MNL) demand functions. Then, given the conditions of high nonlinearity in the resulting discrete-continuous problem, we implement three well-known metaheuristics to solve the integrated problem. Last, to quantify the impact of such integration, 180 instances are randomly generated, and the problem is solved using both sequential and integrated approaches. Computational experiments demonstrate the economic benefits of our approach.

Original languageEnglish
Pages (from-to)536-546
Number of pages11
JournalJournal of Industrial and Production Engineering
Volume38
Issue number7
DOIs
StatePublished - 2021
Externally publishedYes

Bibliographical note

Publisher Copyright:
© 2021 Taylor & Francis Group, LLC.

Keywords

  • Coordinated inventory policies
  • multi echelon inventory systems
  • multinomial logit
  • pricing

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