Bi-level Pricing and Replenishment in Supply Chains

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Journal Article
Intelligent Systems Reference Library, 2015, 82 pp. 325 - 336
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© Springer-Verlag Berlin Heidelberg 2015. Effective pricing and replenishment strategies in supply chain management are the keys to business success. Notably, with rapid technological innovation and strong competition in hi-tech industries such as computer and communication organizations, the upstream component price and the down-stream product cost usually decline significantly with time. As a result, effective pricing and replenishment decision models are very important in supply chain management. This chapter first establishes a bi-level pricing and replenishment strategy optimization model in hi-tech industry. Then, two bi-level pricing models for pricing problems, in which the buyer and the vendor in a supply chain are respectively designated as the leader and the follower, are presented. Experiments illustrate that bi-level decision techniques can solve problems defined by these models and can achieve a profit increase under some situations, compared with the existing methods.
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