Journal article
Concurrent pricing and lot sizing for make-to-order contract production
International journal of production economics, v 93-94(1)
08 Jan 2005
Featured in Collection : UN Sustainable Development Goals @ Drexel
Abstract
This paper develops a model for the simultaneous (i.e. concurrent) determination of the inventory and pricing policies of a supplier, which produces and supplies a product to a buyer, on the basis of a contractual agreement, calling for the delivery of a specific quantity periodically. Assuming that the customer is rational, i.e. it follows its own optimal purchasing policy, the objective of the supplier is to determine the product's selling price, in conjunction with an appropriate production/inventory policy, so that a predetermined gross profit level is achieved. It is further assumed that the supplier's production batch size is an integer multiple of the buyer's order quantity. In formulating a mathematical model of this situation, the interactions between the product's price, the buyer's economic order quantity and the supplier's selling price, costs and profit are taken into account. For solving this model, a simple iterative algorithm is proposed, which is illustrated through a numerical example. Sensitivity analysis performed on the model demonstrates that it is relatively robust and quite insensitive to errors in estimating the buyer's ordering to carrying cost ratio on the part of the producer.
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Details
- Title
- Concurrent pricing and lot sizing for make-to-order contract production
- Creators
- Avijit Banerjee - Drexel University
- Publication Details
- International journal of production economics, v 93-94(1)
- Publisher
- Elsevier
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Decision Sciences (and Management Information Systems)
- Web of Science ID
- WOS:000225423600019
- Scopus ID
- 2-s2.0-9544235192
- Other Identifier
- 991019168032904721
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InCites Highlights
Data related to this publication, from InCites Benchmarking & Analytics tool:
- Web of Science research areas
- Engineering, Industrial
- Engineering, Manufacturing
- Operations Research & Management Science