Research On The Coordination Of The Supply Chain With Stock And Price Sensitive Demand

The coordination of supply chain can be an effective way to cope with the uncertainty of customer’s demand, the time-varying of information, the scarcity of resources and other major challenges. Therefore the coordination of supply chain has important research significance. In fact, the sale for some products is influenced by stock and the price. It is easy to attract a large number of custom-ers come to buy when the stock is very large and when the products’ price is relatively low. Otherwise, it will despair customer’s desire to buy. A quantity discount policy to coordinate the supply chain for some items with stock and price sensitive demand is discussed in this paper, and the main point contains:(1) The coordination of the supply chain with a price discount and with stock and price sensitive demand is studied. It is assured that the demand is in-fluenced by the stock and price. The mathematical models are presented in the following three cases, i.e., decentralized decision, centralized decision and coordinated decision. The theoretical analysis for the models is conducted and some algorithms are designed to find the optimal solutions. By applying the price discount strategy, the profit of the centralized decision is assigned to the supplier and retailer. It is proved that the supply chain can get a perfect coordi-nation by designing a rational price discount under some conditions. Numerical examples are used to illustrate the proposed models. At the same time, the sen-sitivity analysis of some important parameters is carried out.(2) The coordination of the supply chain with a price discount and the sup-plier’s profit growth is proportional to retailer’s profit growth is studied. The mathematical models are developed in the following two cases, i.e., decentra-lized decision and coordinated decision. The price discount opportunity cost is introduced to the profit function in the coordination model. The properties of the optimal solution for the models are analyzed. The corresponding algorithms are designed to find the optimal solutions. On the basis of the price discount and the supplier’s profit growth is proportional to retailer’s profit growth, a coordination mechanism is designed to coordinate the supply chain. It is proved that the supply chain can get a perfect coordination under some conditions. The influ-ence of some important parameters’change on the optimal ordering decision is investigated by applying the numerical experiment method.