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Optimal Dynamic Pricing for Assembly Product Supply Chain

Received: 19 December 2016     Accepted: 3 January 2017     Published: 25 January 2017
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Abstract

To study the optimal decisions of suppliers and assemblers in an assembly product supply chain which contains two generations of product. With updated components, a dynamic assembly product supply chain model whose demand is time-varying was built based on product diffusion model. The optimal dynamic pricing decisions and profits of all entities in the supply chain were acquired through theoretical analysis and simulation based on Stackelberg and Nash game. Some insights have been derived: The profits of two assemblers are increased, while two suppliers’ profits are relatively reduced if the two assemblers cooperate with each other. The growth rates of suppliers’ wholesale prices of two generations of products are opposite, and those of assemblers’ retail prices are also opposite whether two assemblers are cooperative or not. With cooperation, the ranges of wholesale prices changing over time are higher, while the ranges of assemblers’ retail prices changing over time are lower than those without cooperation.

Published in American Journal of Operations Management and Information Systems (Volume 2, Issue 2)
DOI 10.11648/j.ajomis.20170202.14
Page(s) 54-71
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2017. Published by Science Publishing Group

Keywords

Components Update, Assembly Product Supply Chain, Stackelberg Game, Optimal Pricing

References
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  • APA Style

    Yufang Chen, Yong Luo. (2017). Optimal Dynamic Pricing for Assembly Product Supply Chain. American Journal of Operations Management and Information Systems, 2(2), 54-71. https://doi.org/10.11648/j.ajomis.20170202.14

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    ACS Style

    Yufang Chen; Yong Luo. Optimal Dynamic Pricing for Assembly Product Supply Chain. Am. J. Oper. Manag. Inf. Syst. 2017, 2(2), 54-71. doi: 10.11648/j.ajomis.20170202.14

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    AMA Style

    Yufang Chen, Yong Luo. Optimal Dynamic Pricing for Assembly Product Supply Chain. Am J Oper Manag Inf Syst. 2017;2(2):54-71. doi: 10.11648/j.ajomis.20170202.14

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  • @article{10.11648/j.ajomis.20170202.14,
      author = {Yufang Chen and Yong Luo},
      title = {Optimal Dynamic Pricing for Assembly Product Supply Chain},
      journal = {American Journal of Operations Management and Information Systems},
      volume = {2},
      number = {2},
      pages = {54-71},
      doi = {10.11648/j.ajomis.20170202.14},
      url = {https://doi.org/10.11648/j.ajomis.20170202.14},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ajomis.20170202.14},
      abstract = {To study the optimal decisions of suppliers and assemblers in an assembly product supply chain which contains two generations of product. With updated components, a dynamic assembly product supply chain model whose demand is time-varying was built based on product diffusion model. The optimal dynamic pricing decisions and profits of all entities in the supply chain were acquired through theoretical analysis and simulation based on Stackelberg and Nash game. Some insights have been derived: The profits of two assemblers are increased, while two suppliers’ profits are relatively reduced if the two assemblers cooperate with each other. The growth rates of suppliers’ wholesale prices of two generations of products are opposite, and those of assemblers’ retail prices are also opposite whether two assemblers are cooperative or not. With cooperation, the ranges of wholesale prices changing over time are higher, while the ranges of assemblers’ retail prices changing over time are lower than those without cooperation.},
     year = {2017}
    }
    

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  • TY  - JOUR
    T1  - Optimal Dynamic Pricing for Assembly Product Supply Chain
    AU  - Yufang Chen
    AU  - Yong Luo
    Y1  - 2017/01/25
    PY  - 2017
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    DO  - 10.11648/j.ajomis.20170202.14
    T2  - American Journal of Operations Management and Information Systems
    JF  - American Journal of Operations Management and Information Systems
    JO  - American Journal of Operations Management and Information Systems
    SP  - 54
    EP  - 71
    PB  - Science Publishing Group
    SN  - 2578-8310
    UR  - https://doi.org/10.11648/j.ajomis.20170202.14
    AB  - To study the optimal decisions of suppliers and assemblers in an assembly product supply chain which contains two generations of product. With updated components, a dynamic assembly product supply chain model whose demand is time-varying was built based on product diffusion model. The optimal dynamic pricing decisions and profits of all entities in the supply chain were acquired through theoretical analysis and simulation based on Stackelberg and Nash game. Some insights have been derived: The profits of two assemblers are increased, while two suppliers’ profits are relatively reduced if the two assemblers cooperate with each other. The growth rates of suppliers’ wholesale prices of two generations of products are opposite, and those of assemblers’ retail prices are also opposite whether two assemblers are cooperative or not. With cooperation, the ranges of wholesale prices changing over time are higher, while the ranges of assemblers’ retail prices changing over time are lower than those without cooperation.
    VL  - 2
    IS  - 2
    ER  - 

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Author Information
  • School of Electrical Engineering, Zhengzhou University, Zhengzhou, China

  • Dept. Industrial & Manufacturing Eng., University of Wisconsin, Milwaukee, USA

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