Integrating pricing and coordinated inventory decisions between one warehouse and multiple retailers

This paper studies integration between pricing and coordinated inventory decisions for a two-echelon supply chain in a competitive environment. To the best of our knowledge, these problems have traditionally been solved separately. Therefore, we aim to support the decision-making process by following an integrated approach. First, we develop a novel mathematical model that coordinates inventory policies between one warehouse and N retailers and determines the selling price using multinomial logit (MNL) demand functions. Then, given the conditions of high nonlinearity in the resulting discrete-continuous problem, we implement three well-known metaheuristics to solve the integrated problem. Last, to quantify the impact of such integration, 180 instances are randomly generated, and the problem is solved using both sequential and integrated approaches. Computational experiments demonstrate the economic benefits of our approach.

Automated summary

This study investigates the integration between pricing and coordinated inventory decisions for a two-echelon supply chain in a competitive environment. A novel mathematical model is developed to coordinate inventory policies and determine selling prices using MNL demand functions, with three metaheuristics implemented to solve the resulting discrete-continuous problem. Computational experiments demonstrate the economic benefits of the integrated approach.