Volume 55, 2021Regular articles published in advance of the transition of the journal to Subscribe to Open (S2O). Free supplement sponsored by the Fonds National pour la Science Ouverte
|Page(s)||S119 - S145|
|Published online||09 February 2021|
Two-level promotion and ordering policy in a supply chain
Department of Industrial Management, National Taiwan University of Science and Technology, Taipei, Taiwan (R.O.C).
2 Artificial Intelligence for Operations Management Research Center, National Taiwan University of Science and Technology, Taipei, Taiwan (R.O.C).
3 College of Intelligence, National Taichung University of Science and Technology, Taichung, Taiwan (R.O.C).
* Corresponding author: email@example.com
Accepted: 6 September 2019
This research develops two models to consider retailer sales promotion and manufacturer trade promotion under demand uncertainty. The objective of the first model is to determine the retailer’s optimal promotional effort and order quantity while maximizing the retailer’s profit under exogenous trade promotion. The second model extends the first to consider the manufacturer’s endogenous trade promotion decisions. For these models, three different trade promotion policies (off-invoice, scan-back, unsold-discount) have been compared to identify the policy that can increase the manufacturer’s and the retailer’s profits. For the model with exogenous trade promotion, the retailer’s promotional effort level, order quantity, and profit are highest under the off-invoice trade promotion policy. With respect to the manufacturer’s endogenous trade promotion decisions, the retailer’s promotional effort level, order quantity, and profit, and the manufacturer’s profit are higher under the off-invoice policy than under the scan-backs policy. When comparing the three different trade promotion policies, we also find that the wholesale price is a key factor that influences a manufacturer’s profit. Our research sheds light on the importance of trade promotion policy in supply chain management.
Mathematics Subject Classification: 90B05
Key words: Supply chain management / replenishment / trade promotion / sales promotion / promotional effort
© EDP Sciences, ROADEF, SMAI 2021
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