A Quantity Discount Pricing Model Based on the Standard Container under Asymmetric Information
ABSTRACT
A supply chain system is studied, in which the information about the retailer’s storage cost is usually asymmetric. This paper studies the inventory control in the system and presents a quantity discount pricing model for inventory coordination based on the standard container, a transport tool from the supplier to the retailer with a fixed size. First, it investigates the inventory models under full information. Before inventory coordination, the supplier and the retailer my-opically choose their lot sizes, which is not the optimal decision for the whole system. Then, it presents an incentive scheme under asymmetric information from the point of view of the supplier. It also discusses the solution and the distribution of the incremental profits after the incentive scheme is adopted by both the supplier and the retailer. A con-stant in the model, which affects the distribution of the incremental profits, is optimized for the supplier by using numerical analysis. Finally, an example illustrates the application of the model. After inventory coordination, both the supplier and the retailer have a positive incremental profit.
A supply chain system is studied, in which the information about the retailer’s storage cost is usually asymmetric. This paper studies the inventory control in the system and presents a quantity discount pricing model for inventory coordination based on the standard container, a transport tool from the supplier to the retailer with a fixed size. First, it investigates the inventory models under full information. Before inventory coordination, the supplier and the retailer my-opically choose their lot sizes, which is not the optimal decision for the whole system. Then, it presents an incentive scheme under asymmetric information from the point of view of the supplier. It also discusses the solution and the distribution of the incremental profits after the incentive scheme is adopted by both the supplier and the retailer. A con-stant in the model, which affects the distribution of the incremental profits, is optimized for the supplier by using numerical analysis. Finally, an example illustrates the application of the model. After inventory coordination, both the supplier and the retailer have a positive incremental profit.
Cite this paper
nullZ. DING and K. WANG, "A Quantity Discount Pricing Model Based on the Standard Container under Asymmetric Information," Journal of Service Science and Management, Vol. 2 No. 3, 2009, pp. 215-220. doi: 10.4236/jssm.2009.23026.
nullZ. DING and K. WANG, "A Quantity Discount Pricing Model Based on the Standard Container under Asymmetric Information," Journal of Service Science and Management, Vol. 2 No. 3, 2009, pp. 215-220. doi: 10.4236/jssm.2009.23026.
References
[1] D. J. Thomas and P. M. Griffin, “Coordinated supply chain management,” European Journal of Operational Research, No. 94, pp. 1-15, 1996. [2] H. L. Lee and M. J. Rosenblatt, “A generalized quantity discount pricing model to increase supplier profits,” Man-agement Science, No. 32, pp. 1177-1185, 1986. [3] S. K. Goyal, “An integrated inventory model for a single supplier-single customer problem,” International Jounal of Production Research, No. 15, pp. 107-111, 1976. [4] J. P. Monahan, “A quantity discount pricing model to increase vendor profits,” Management Science, No. 30, pp. 720-726, 1984. [5] Z. K. Weng, “Channel coordination and quantity discounts,” Management Science, No. 41, pp. 1509–1522, 1995. [6] C. J. Corbett and X. D. Groote, “A supplier’s optimal quantity discount policy under asymmetric information,” Management Science, No. 46, pp. 444-450, 2000. [7] M. Guo and H. W. Wang, “Coordination mechanism in a lot-for-lot supply chain under asymmetric information,” Computer Integrated Manufacturing System, No. 10, pp. 152-156, 2004. [8] F. Chen, “Optimal policies for multi-echelon inventory problems with batch ordering,” Operations Research, No. 48, pp. 376-389, 2000. [9] P. Pantumsinchai and T. W. Knowles, “Standard container size discounts and the single-period inventory problem,” Decis Sci, No. 22, pp. 612-619, 1991. [10] S. Hojung and W. C. Benton, “A quantity discount approach to supply chain coordination,” European Journal of Operational Research, No. 180, pp. 601-616, 2007.
[1] D. J. Thomas and P. M. Griffin, “Coordinated supply chain management,” European Journal of Operational Research, No. 94, pp. 1-15, 1996. [2] H. L. Lee and M. J. Rosenblatt, “A generalized quantity discount pricing model to increase supplier profits,” Man-agement Science, No. 32, pp. 1177-1185, 1986. [3] S. K. Goyal, “An integrated inventory model for a single supplier-single customer problem,” International Jounal of Production Research, No. 15, pp. 107-111, 1976. [4] J. P. Monahan, “A quantity discount pricing model to increase vendor profits,” Management Science, No. 30, pp. 720-726, 1984. [5] Z. K. Weng, “Channel coordination and quantity discounts,” Management Science, No. 41, pp. 1509–1522, 1995. [6] C. J. Corbett and X. D. Groote, “A supplier’s optimal quantity discount policy under asymmetric information,” Management Science, No. 46, pp. 444-450, 2000. [7] M. Guo and H. W. Wang, “Coordination mechanism in a lot-for-lot supply chain under asymmetric information,” Computer Integrated Manufacturing System, No. 10, pp. 152-156, 2004. [8] F. Chen, “Optimal policies for multi-echelon inventory problems with batch ordering,” Operations Research, No. 48, pp. 376-389, 2000. [9] P. Pantumsinchai and T. W. Knowles, “Standard container size discounts and the single-period inventory problem,” Decis Sci, No. 22, pp. 612-619, 1991. [10] S. Hojung and W. C. Benton, “A quantity discount approach to supply chain coordination,” European Journal of Operational Research, No. 180, pp. 601-616, 2007.