INVENTORY COORDINATING MECHANISM FOR MARKETING DECISION IN SUPPLY CHAIN WITH PRICE DEPENDENT DEMAND

Abstract

 In today's market, companies realized that the performance of their businesses depends largely on external collaboration and coordination across the supply chain. Manufacturers are looking for improvement in profitability as well as how to coordinate their replenishment and pricing decisions that will benefit all the contributing parties in the supply chain. The objective of this study was to determine a marketing mechanism in a three scenarios that was beneficial to the partners and the general supply chain profitability. We applied a linear demand model with a deterministic price dependent customer demand where demand was represented as a decreasing function of price with the retail price given. Our results show that the price of 60 francs maximizes the supply chain profit function with 32400 francs for retailer but not for supplier. Also, the retailer's original profit of 32400 at an inventory price of 60 decreases to zero profitas the supplier increases the pricefrom 60Francs to 1000Francs.Our conclusion shows that at a lower price the centralized and joint or partnership scenarios lead to better profit and if the supplier set the price too high, the demand and the SC profit will be zero