Effects of dominance on operation policies in a two-stage supply chain in which market demands follow the Bass diffusion model

¹ Industrial and Systems Engineering Department, International University, Vietnam National University, Ho Chi Minh City, Vietnam.
² Department of Industrial Management, National Taiwan University of Science and Technology, Taipei 10607, Taiwan.

^* Corresponding author: vincent@mail.ntust.edu.tw

Received: 7 June 2017
Accepted: 29 April 2018

Abstract

The Bass model offers several successful applications in forecasting the diffusion process of new products. Due to its potential and flexibilities, the application of this model is not only limited now to forecasting, but also extends to other fields such as analyzing a supply chain’s responses, optimizing production plans, and so forth. This study investigates inventory and production policies in a two-stage supply chain with one manufacturer and one retailer, in which the market demand process follows the Bass diffusion model. The model assumes the market parameters and essential information are available and ready for access. This study then applies dynamic programming and heuristic algorithm to find the optimal policies for each stage under different scenarios.