Joint Production And Pricing Decisions In Multi-product System

Co-product production system and by-product production system are two kinds of multi-product system,which are commonly observed in practice.Co-product production system is characterized by simultaneous manufacturing of horizontal/vertical differentiated products in a single production run.By-product production system means that waste generated in one production process can be utilized as resource in another process.In coproduct production system,co-product manufacturer is often encountered with demand uncertainty and yield uncertainty.To satisfy customer demand,co-product manufacturer may adopt down-conversion policy which enables manufacturer to produce low end product through high end raw material.In by-product production system,a typical proplem is how to match supply and demand of waste.Considering co-product production system,this dissertation studies co-product manufacturer's joint production and pricing decisions in different stochastic environment and optimal down-conversion policy.Considering byproduct production system,this dissertation studies optimal production and pricing decisions in different by-product synergy(BPS)structures.Specifically,the research work is summarized as follows:Firstly,based on multiple-product stochastic demand,this dissertation investigates the co-product manufacturer's joint quantity and pricing decisions and obtains the optimal decisions.Meanwhile,we consider the case that the stochastic demand follows uniform distribution and analyze the effect of demand volatility on the optimal decisions.Based on random yield,this dissertation investigates the manufacturer's optimal pricing and quantity strategies under different demand functions(i.e.,linear demand and exponential demand).Through numerical examinations,we explore the effects of different parameters(substitutability,standard deviation)on the manufacturer's quantity and profit.Secondly,this dissertation investigates manufacturer's joint input quantity,downconversion policy and pricing decisions in a co-production system wherein two vertical differentiated products are simultaneous manufactured.We find that the adoption of down-conversion policy is threshold controlled by the unit down-conversion cost,and only when the down-conversion cost is sufficiently low will the manufacturer adopt this policy.To benefit from this policy sufficiently,the manufacturer is always aggressive to input more quantity regardless of the yield pattern.Specifically,when the manufacturer adopts downconversion policy(under the assumption that the random yield follows a uniform distribution),the optimal input quantity in the random yield scenario is higher than that in the deterministic yield scenario when the down-conversion cost is low.Thirdly,this dissertation investigates a by-product system composed of two competing manufacturers and one downstream processing plant with limited BPS capacity.The plant generates a byproduct with waste from manufacturers and sells the by-product in a market with uncertain prices.We derive each manufacturer's equilibrium decisions(production quantity and disposal amount)and the plant's capacity investment plan(ex ante).We show that BPS always benefits manufacturers,but the extent of this benefit depends on two opposite effects(a competition effect and a cost-saving effect).A counterintuitive result that higher investment cost may increase each manufacturer's profit arises due to these two effects.Finally,this dissertation investigates a by-product system constituted of competitive upstream manufacturers and competitive downstream plants.The manufacturers trade the wastes with downstream plants through online marketplace,which can be profitable or nonprofitable.Particularly,the profitable marketplace charges(upstream parties)transaction fee for unit trading volume of waste.To encourage the disposal of waste,the government also subsidizes the downstream parties for processing the waste based on maximal social welfare.We characterize each player's equilibrium decision in each configuration(with different marketplace type and government behavior)and reveal that the existence of trading marketplace may not always benefit manufacturer.