African Journal of
Business Management

  • Abbreviation: Afr. J. Bus. Manage.
  • Language: English
  • ISSN: 1993-8233
  • DOI: 10.5897/AJBM
  • Start Year: 2007
  • Published Articles: 4190

Full Length Research Paper

A two-echelon inventory model for fuzzy demand with mutual beneficial pricing approach in a supply chain

  Hill Hung-Jen Tu1, Ming-Cheng Lo2* and Ming-Feng Yang3      
  1Department of International Business, Providence University No. 200, Chung Chi Rd., Taichung 433, Taiwan (R. O. C.). 2Department of Business Administration, Ching Yun University, No. 229, Chien-Hsin Rd., Jung-Li 320, Taiwan (R. O. C.). 3Department of Transportation Science, National Taiwan Ocean University, No.2, Beining Rd., Jhongjheng District, Keelung City 202,Taiwan (R. O. C.).  
Email: [email protected]

  •  Accepted: 31 August 2010
  •  Published: 31 July 2011

Abstract

 

This paper develops a two-echelon inventory model with mutual beneficial pricing strategy with considering fuzzy annual demand; single vendor and multiple buyers in this model. The beneficial pricing strategy can benefit the vendor more than multiple buyers in the integrated system, when price reduction is incorporated to entice the buyers to accept the minimum total cost. Negotiation factors is very important in the in fuzzy model, it can balance the cost saving between the players. A numerical example with sensitivity analysis is provided to demonstrate the theory. Finally, this paper can prove that the price reduction mechanism is a mutual beneficial strategic partnership between the vendor and buyers.

 

Key words: Fuzzy annual demand, price reduction.

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This article is published under the terms of the Creative Commons Attribution License 4.0

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