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Joint optimization of pricing and planning decisions in divergent supply chain

Guajardo, Mario (author)
NHH Norwegian School Econ, Norway
Kylinger, Martin (author)
Linköpings universitet,Produktionsekonomi,Tekniska högskolan
Ronnqvist, Mikael (author)
NHH Norwegian School Econ, Norway
 (creator_code:org_t)
2013-06-24
2013
English.
In: International Transactions in Operational Research. - : Wiley-Blackwell. - 0969-6016 .- 1475-3995. ; 20:6, s. 889-916
  • Journal article (peer-reviewed)
Abstract Subject headings
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  • In divergent supply chains, such as in the oil industry, processing raw materials results in an outflow of multiple products. Final products are stored at international depots, from where they are ready to be shipped to the markets. Even if one company controls the entire chain, when production and sales organizations are decoupled, a relevant problem is to determine the internal prices of products at depots for achieving coordination. We propose an optimization model involving pricing and production decisions, and several constraints commonly used in divergent chains. In our approach, the producer incorporates the sellers behavior by expressing demand as a function of the internal price. As a result, our model serves as a coordination mechanism in trying to get an overall coordinated integrated solution in a decoupled reality. Numerical examples in single and multiple periods problems show the advantages of our approach over cost-based methods.

Keyword

divergent supply chain
coordination
internal pricing
OR in the oil sector
TECHNOLOGY
TEKNIKVETENSKAP

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