Impact of pricing and inventory policies with benefit sharing mechanism on supply chain performances

Abstract

This paper is to analyse impacts of pricing policies, inventory policies, and benefit sharing mechanism on supply chain (SC) performances. The novelties and theoretical contributions of this paper include a development of linear mathematical functions to represent pricing policies, especially 'every day low price' (EDLP), and explicitly considering cash as one of the performance measures in addition to profit and revenue. A mix integer linear programming (MILP) model with pricing mechanism and policy constraints is developed. A case study in plastic fashion accessory industry in Thailand is performed. Experiments are conducted to demonstrate how the proposed model is applied. The performance measures are translated into satisfaction levels and plotted in a radar chart to facilitate performance comparison among policies. Practical contribution is that this paper recommends suitable combinations of policies to match with the priority of profit, revenue, and cash performances. [Received 10 January 2018; Revised 12 June 2018; Accepted 19 June 2018]