Article ID: | iaor20041502 |
Country: | United States |
Volume: | 34 |
Issue: | 1 |
Start Page Number: | 173 |
End Page Number: | 188 |
Publication Date: | Dec 2003 |
Journal: | Decision Sciences |
Authors: | Rubin Paul A., Benton W.C. |
Keywords: | programming: mathematical |
The use of price to influence a buyer's purchasing behavior and thus improve supply chain coordination has received considerable attention. The vendor and buyer are independent economic entities, each maximizing its own profit. We consider the case of a buyer with fixed annual demand, independent of cost. The vendor's objective is to set a price schedule that encourages the buyer to raise its order quantity, increasing the vendor's profits. We present a unified treatment of the problem, categorize different variations, and provide a common solution procedure for all cases.