Advertisement

TOP

, Volume 27, Issue 1, pp 55–69 | Cite as

Effect of manufacturer’s innovation and retailer’s promotion under trapezoidal demand with centralized and decentralized options

  • Nita H. ShahEmail author
  • Urmila Chaudhari
  • Mrudul Y. Jani
Original Paper
  • 60 Downloads

Abstract

In this paper, supply chain deals with a single manufacturer and a single retailer. A manufacturer employs innovation and a retailer employs promotional efforts to elevate the demand and sales of their respective products. The following paper uses decentralized and centralized models to analyze supply chain for innovation, promotional efforts, and replenishment time, when stocks deteriorate at a constant rate considering trapezoidal demand of the product, which depends on the manufacturer’s innovation and the retailer’s promotional efforts. It is found that the total profit of supply chain improves with joint decisions; however, it reduces individual profit. The individual profit of the retailer decreases due to centralized approach, and therefore, the manufacturer tries to lure the retailer through discounts in the selling price of the product, trade credit, and profit sharing. Due to these types of offers, retailer is ready to take part into joint decision. As a result, supply chain maximizes their profit centrally. The following paper aims to optimize the total profit of supply chain keeping in view of the manufacturer’s innovation efforts, the retailer’s promotional efforts, and replenishment time. The model is supported by numerical examples, applies sensitivity analysis to deduce managerial insights, and concludes on working in coordination for optimal profit/benefits.

Keywords

Innovation Promotional tool Constant deterioration Centralized and decentralized options 

Notes

Acknowledgements

The authors thank reviewer for constructive comments. The first author is thankful to DST- FIST –file # MSI 097 for the financial assistance to carry out this research.

References

  1. Bai Q-G, Xu X-H, Chen M-Y, Luo Q (2015) A two-echelon supply chain coordination for deteriorating item with a multi-variable continuous demand function. Int J Syst Sci Oper Logistics 2(1):49–62Google Scholar
  2. Bai Q, Chen M, Xu L (2017) Revenue and promotional cost-sharing contract versus two-part tariff contract in coordinating sustainable supply chain systems with deteriorating items. Int J Prod Econ 187(January):85–101CrossRefGoogle Scholar
  3. Banerjee A (1986) A joint economic lot size model for purchaser and vendor. Decis Sci 17(3):292–311CrossRefGoogle Scholar
  4. Buratto A, Grosset L, Viscolani B (2007) Advertising coordination games of a manufacturer and a retailer while introducing a new product. TOP 15(2):307–321CrossRefGoogle Scholar
  5. Cárdenas-Barrón LE, Sana SS (2014) A production-inventory model for a two-echelon supply chain when demand is dependent on sales teams’ initiatives. Int J Prod Econ 155(2014):249–258CrossRefGoogle Scholar
  6. Cárdenas-Barrón LE, Sana SS (2015) Multi-item EOQ inventory model in a two-layer supply chain while demand varies with a promotional effort. Appl Math Model 39(21):6725–6737CrossRefGoogle Scholar
  7. Cheng M, Zhang B, Wang G (2011) Optimal policy for deteriorating items with trapezoidal type demand and partial backlogging. Appl Math Model 35:3552–3560CrossRefGoogle Scholar
  8. Chung KJ, Cárdenas-Barrón LE (2013) The simplified solution procedure for deteriorating items under stock-dependent demand and two-level trade-credit in the supply chain management. Appl Math Model 37(7):4653–4660CrossRefGoogle Scholar
  9. Ge Z, Hu Q, Xia Y (2014) Firms' R&D cooperation behavior in a supply Chain. Prod Oper Manag 23(4):599–609CrossRefGoogle Scholar
  10. Gilbert SM, Cvsa V (2003) Strategic commitment to price to stimulate downstream innovation in a supply chain. Eur J Oper Res 150(3):617–639CrossRefGoogle Scholar
  11. Goyal SK (1976) An integrated inventory model for a single supplier-single customer problem. Int J Prod Res 15(1):107–111CrossRefGoogle Scholar
  12. Hill RM (1997) The single-vendor single-buyer integrated production-inventory model with a generalized policy. Eur J Oper Res 97(3):493–499CrossRefGoogle Scholar
  13. Huang CK (2004) An optimal policy for a single-vendor single-buyer integrated production-inventory problem with process unreliability consideration. Int J Prod Econ 91(1):91–98CrossRefGoogle Scholar
  14. Jørgensen S, Zaccour G (2014) A survey of game-theoretic models of cooperative advertising. Eur J Oper Res 237(1):1–14CrossRefGoogle Scholar
  15. Karray S (2015) Cooperative promotions in the distribution channel. Omega 51(2015):49–58CrossRefGoogle Scholar
  16. Littler D, Melanthiou D (2006) Consumer perceptions of risk and uncertainty and the implications for behavior towards innovative retail services: the case of internet banking. J Retail Consum Serv 13(6):431–443CrossRefGoogle Scholar
  17. Ma P, Wang H, Shang J (2013) Contract design for two-stage supply chain coordination: integrating manufacturer-quality and retailer-marketing efforts. Int J Prod Econ 146(2):745–755CrossRefGoogle Scholar
  18. Mishra U, Tijerina-Aguilera J, Tiwari S, Cárdenas-Barrón LE (2018) Retailer’s joint ordering, pricing and preservation technology investment policies for a deteriorating item under permissible delay in payments. Math Probl Eng 2018:14CrossRefGoogle Scholar
  19. Nagaraju D, Rao AR, Narayanan S (2016) Centralized and decentralized three echelon inventory model for optimal inventory decisions under price dependent demand. Int J Logist Syst Manag 23(2):147–170CrossRefGoogle Scholar
  20. Nematollahi M, Hosseini-Motlagh SM, Heydari J (2017) Coordination of social responsibility and order quantity in a two-echelon supply chain: a collaborative decision-making perspective. Int J Prod Econ 184(2017):107–121CrossRefGoogle Scholar
  21. Nouri M, Motlagh SMH, Nematollahi M, Sarker BR (2018) Coordinating manufacturer’s innovation and retailer’s promotion and replenishment using a compensation-based wholesale price contract. Int J Prod Econ 198(2018):11–24CrossRefGoogle Scholar
  22. Ouyang LY, Chuang CJ, Ho CH, Wu CW (2014) An integrated inventory model with quality improvement and two-part credit policy. TOP 22(3):1042–1061CrossRefGoogle Scholar
  23. Shah NH, Jani MY, Chaudhari U (2017a) Inventory control Policies for deteriorating item with preservation technology, quadratic demand and trade credit for a single supplier-two retailers supply chain: a centralization vs. decentralization approach. Handbook of research on promoting business process improvement through Inventory Control technic.  https://doi.org/10.4018/978-1-5225-3232-3.ch0011
  24. Shah NH, Chaudhari U, Jani MY (2018) Studied optimal control analysis for preservation technology investment, inventory and service. Int J Syst Sci Oper Logist.  https://doi.org/10.1080/23302674.2018.1447167 Google Scholar
  25. Shah NH, Gor AS, Jhaveri CA (2011) Determination of optimal ordering and transfer policy for deteriorating inventory system when demand is quadratic. Int J Manag Sci Eng Manag 6(4):278–283Google Scholar
  26. Shah NH, Jani MY, Chaudhari U (2017b) Retailer’s optimal policies for price-credit dependent trapezoidal demand under two-level trade credit. Int J Oper Quant Manag 23(2):115–130Google Scholar
  27. Shah NH, Shah DB, Patel DG (2013) Optimal retail price, replenishment time and payment scenario under biddable two-part trade credit for price—sensitive trapezoidal demand. Dyn Contin Discrete Impulsive Syst Ser B Appl Algorithm 20(6b):647–673Google Scholar
  28. Song J, Li F, Wu DD, Liang L, Dolgui A (2017) Supply chain coordination through integration of innovation effort and advertising support. Appl Math Model 49(2017):108–123CrossRefGoogle Scholar
  29. Tiwari S, Cárdenas-Barrón LE, Goh M, Shaikh AA (2018) Joint pricing and inventory model for deteriorating items with expiration dates and partial backlogging under two-level partial trade credits in supply chain. Int J Prod Econ 200:16–36CrossRefGoogle Scholar
  30. Tsao YC, Sheen GJ (2008) Dynamic pricing, promotion and replenishment policies for a deteriorating item under permissible delay in payments. Comput Oper Res 35(11):3562–3580CrossRefGoogle Scholar
  31. Wang J, Shin H (2015) The impact of contracts and competition on upstream innovation in a supply chain. Prod Oper Manag 24(1):134–146CrossRefGoogle Scholar
  32. Woo YY, Hsu SL, Wu S (2001) An integrated inventory model for single vendor and multiple buyers with ordering cost reduction. Int J Prod Econ 73(1):203–215CrossRefGoogle Scholar
  33. Yang PC, Wee HM (2000) Economic ordering policy of deteriorated item for vendor and buyer: an integrated approach. Prod Plan Control 11(5):474–480CrossRefGoogle Scholar
  34. Yenipazarli A (2016) To collaborate or not to collaborate: prompting upstream eco-efficient innovation in a supply chain. Eur J Oper Res 260(2):571–587CrossRefGoogle Scholar
  35. Zhang J, Liu G, Zhang Q, Bai Z (2015) Coordinating a supply chain for deteriorating items with a revenue sharing and cooperative investment contract. Omega 56(1):37–49CrossRefGoogle Scholar

Copyright information

© Sociedad de Estadística e Investigación Operativa 2018

Authors and Affiliations

  1. 1.Department of MathematicsGujarat UniversityAhmedabadIndia
  2. 2.Government Polytechnic DahodDahodIndia
  3. 3.Department of Applied Sciences, Faculty of Engineering and TechnologyParul UniversityVadodaraIndia

Personalised recommendations