Particle swarm optimization for bi-level pricing problems in supply chains

Springer New York LLC
Publication Type:
Journal Article
Journal Of Global Optimization, 2011, 51 (2), pp. 245 - 254
Issue Date:
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With rapid technological innovation and strong competition in hi-tech industries such as computer and communication organizations, the upstream component price and the downstream product cost usually decline significantly with time. As a result, an effective pricing supply chain model is very important. This paper first establishes two bi-level pricing models for pricing problems with the buyer and the vendor in a supply chain designated as the leader and the follower, respectively. A particle swarm optimization (PSO) based algorithm is developed to solve problems defined by these bi-level pricing models. Experiments illustrate that this PSO based algorithm can achieve a profit increase for buyers or vendors if they are treated as the leaders under some situations, compared with the existing methods.
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