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Chinese Journal of Management Science ›› 2020, Vol. 28 ›› Issue (10): 165-171.doi: 10.16381/j.cnki.issn1003-207x.2020.10.016

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Research on Supply Chain Network Optimization with the Relationship of Pricing and Demand

HU Hong-tao1, BIAN Ying-ying1, GUO Shu-yuan1, WANG Shuai-an2, YAN Wei1   

  1. 1. School of Logistics Engineering, Shanghai Maritime University, Shanghai 201306, China;
    2. Department of Logistics and Maritime Studies, The Hong Kong Polytechnic University, Hong Kong 999077, China
  • Received:2018-03-31 Revised:2019-04-23 Online:2020-10-20 Published:2020-11-11

Abstract: In the supply chain network, prices have a large impact on the consumer demand and profits. In this paper, a price-demand function is introduced to describe the effect of the changing price on consumer demand. Then a three-level supply chain network is constructed which constitutes manufacturer, warehouses, and consumers. By considering the pricing and demand as decision variables, a mixed integer nonlinear programming (MINLP) model is established, which aims to maximize the total profit of the supply chain. To address the MINLP model, the nonlinear objective function is firstly transformed into a nonlinear constraint. Then the nonlinear constraint is approximated by a finite number of tangents by using the outer-approximation method. Finally, a set of linear constraints are added into the model to replace the nonlinear constraint; hence the MINLP model is approximated by a mixed integer linear programming model. Although the scale of the model increases because of linearization, numerical experiments show that the outer-approximation method can still find the optimal solution of the problem on realistic-sized instances in a short time. The proposed model can guide the enterprises in the supply chain to balance the costs and benefits and to improve the customer satisfaction.

Key words: supply chain network, price-demand function, nonlinear programming, outer-approximation method

CLC Number: