A Study On Ordering And Pricing Policies In Supply Chain Networks

Product pricing and ordering are always key issues in firms. With the wide use of the supply chain, obtaining equilibrium ordering and pricing policies to satisfy all supply chain members becomes more important but complex. A supply chain includes different firms, whose relationship is more and more complex as the supply chain structure changes from "Chain" to "Network". There are not only competitions among firms in the same tier, but also those between upstream and downstream firms. At the same time, it is important to consider the effect of different supply chain structure and factors outside the supply chain on the competitive decision. So, it is meaningful to study ordering and pricing problems in such settings.In recent years, the research on the ordering and pricing is developed in operations management. In the mean while, people increasingly recognize the importance of human behaviors on the management and decision, which is shown as the effect of consumers' behavior on equilibrium policies in this paper. This thesis is devoted to study competitive policies and their relations in a supply chain network using the optimization models. The regularity for changes about equilibrium policies is supposed to be found during the structure becomes complex step by step. Then, the interaction between factors outside the supply chain and decisions insides is presented. Details are as follows:1. Contents of the supply chain decision are introduced, factors affecting decisions and policies used in a different product supply chain as well. It specially reviews the literature about the joint decision of ordering and pricing that relates to this thesis.2. Competitive decisions of the members in a 1-1 base supply chain are studied. The paper studies the combined problem of pricing and ordering for a perishable product in the finite and infinite horizon in the framework of a supply chain with one supplier and one retailer. The demands are random and price-sensitive. In each period, the supplier determines firstly the whole sale price and then the retailer decides the order quantity and the retailing prices. We show that the game between the retailer and the supplier for finite or infinite horizons is equivalent to a one period game with only one order. Thus, the optimal policies are identical at each period. Moreover, the optimal pricing strategy for the product with one period lifetime depends only on its inventory, and the optimal pricing strategy and the optimal order quantity for the product with two-period lifetime depend only on the wholesale price and they have a constant relation. For the additive demands, we further obtain equations to compute the optimal strategies. All of above results are extended into the case with longer lifetime products.3. A 2-2 supply chain network is focused on the one including two manufacturers and two retailers, and an optimal model is presented for studying the production ca- pacity competition between manufacturers and order quantities and pricing competitions between retailers. Under the condition that the demand is price sensitive and substi-tuted, we show that there exist the optimal pricing and ordering policies for the retailers, the manufacturers have the optimal production capacity policies that are related to the ordering quantity if the wholesale price is the function of the production quantity and the manufacturers don not use price policy. In the numerical example, we have further conclude that the optimal pricing policy for a retailer is affected by not only the wholesale price, but also the pricing of another retailer, which is increasing in the wholesale price and decreasing in another retail price. While the optimal order quantity is decreasing in the wholesale price and another retail price.4. The model under a 2-2 supply chain network is expanded to that under m-n. For a supply chain network with multiple manufacturers and multiple retailers, this paper analyzes the same competitive problems. Following conclusions are proven under the same demand assumption. The game among retailers is actually the game with different brands in the supply chain. And the retailers can obtain the maximum expected profit in each game. There exist Nash equilibrium of the pricing and ordering for the retailers under a certain condition and the optimal response functions are given. If the wholesale price depends on all manufacturers'production quantities, that is, the manufacturers do not use the pricing discrimination policy, then they also have an equilibrium production quantity under a certain condition.5. The model under a 2-2 supply chain network is expanded to that under m-2-n. A supply chain with a three-tier network is focused including multiple manufacturers, two distributors and multiple retailers. There are competitions among members in same tier. It analyzes combined optimal ordering and pricing policies of the retailers and the distributors and pricing of the manufacturers by models maximizing the expected profits. Relations between policies of the upstream and downstream members are also given.Under the same demand assumption, the following conclusions are obtained. Firstly, the game among members in the same tier downstream is also actually the one with different brands in the supply chain. There exist the optimal ordering policies for the distributor and the manufacturers. Then, some important relations are found among unit costs:the unit savage cost of a distributor equals the sum of the unit production cost and the unit holding cost for the distributors. We also present the decision relationship between the first tier and the last tier in the three tier supply chain network.6. Factors outside the supply chain are accounted into the firms'decisions. We present a model of the pricing and quality decision for the manufacturer and that of the pricing and ordering for the retailer, and the consumers'utility model well based on the optimal theory and utility theory. The complex relation was given between decisions of the supply chain members and the change of the consumers'price/quality sensitivity. Conclusions are as follows. In any purchasing period, the relation among the retailer's optimal pricing, the product quality level and the consumers'price/quality sensitivity is fixed under a given order quantity. The optimal order quantity can be obtained under some conditions. Finally, a numerical example is given to show that the retailer could use the price discrimination policy for consumers in every purchasing period, and the price for one generation product is decreasing with consumers'price/quality sensitivity. The product quality level and the order quantity are all increasing with the consumers' price/quality sensitivity under a given retail price.