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Article: Effects of a demand-curve's shape on the optimal solutions of a multi-echelon inventory/pricing model

TitleEffects of a demand-curve's shape on the optimal solutions of a multi-echelon inventory/pricing model
Authors
KeywordsInventory
Pricing
Retailing
Supply chain management
Issue Date2003
PublisherElsevier BV. The Journal's web site is located at http://www.elsevier.com/locate/ejor
Citation
European Journal Of Operational Research, 2003, v. 147 n. 3, p. 530-548 How to Cite?
AbstractWhen a price-demand relationship is needed in inventory/pricing models, very often a convenient (typically linear) function is arbitrarily chosen. The common-wisdom implication is that any downward-sloping demand curve would lead to similar conclusions. This paper applies different demand-curve functions to a simple inventory/pricing model, and shows that while the common-wisdom implication is valid for a single-echelon system, assuming different demand-curve functions can lead to very different results in a multi-echelon system. In some situations, a very small change in the demand-curve appearance leads to very large changes in the model's optimal solutions. Other significant but counter-intuitive effects of the demand-curve form are also revealed. This paper does not completely resolve the difficulties revealed by the counter-intuitive effects reported here, but establishing the existence of these effects represents a first step towards developing procedures to handle such effects; these procedures will be necessary to ensure the reliability of many multi-echelon models for products having price-sensitive demands. © 2002 Elsevier Science B.V. All rights reserved.
Persistent Identifierhttp://hdl.handle.net/10722/85916
ISSN
2015 Impact Factor: 2.679
2015 SCImago Journal Rankings: 2.595
ISI Accession Number ID
References

 

DC FieldValueLanguage
dc.contributor.authorLau, AHLen_HK
dc.contributor.authorLau, HSen_HK
dc.date.accessioned2010-09-06T09:10:43Z-
dc.date.available2010-09-06T09:10:43Z-
dc.date.issued2003en_HK
dc.identifier.citationEuropean Journal Of Operational Research, 2003, v. 147 n. 3, p. 530-548en_HK
dc.identifier.issn0377-2217en_HK
dc.identifier.urihttp://hdl.handle.net/10722/85916-
dc.description.abstractWhen a price-demand relationship is needed in inventory/pricing models, very often a convenient (typically linear) function is arbitrarily chosen. The common-wisdom implication is that any downward-sloping demand curve would lead to similar conclusions. This paper applies different demand-curve functions to a simple inventory/pricing model, and shows that while the common-wisdom implication is valid for a single-echelon system, assuming different demand-curve functions can lead to very different results in a multi-echelon system. In some situations, a very small change in the demand-curve appearance leads to very large changes in the model's optimal solutions. Other significant but counter-intuitive effects of the demand-curve form are also revealed. This paper does not completely resolve the difficulties revealed by the counter-intuitive effects reported here, but establishing the existence of these effects represents a first step towards developing procedures to handle such effects; these procedures will be necessary to ensure the reliability of many multi-echelon models for products having price-sensitive demands. © 2002 Elsevier Science B.V. All rights reserved.en_HK
dc.languageengen_HK
dc.publisherElsevier BV. The Journal's web site is located at http://www.elsevier.com/locate/ejoren_HK
dc.relation.ispartofEuropean Journal of Operational Researchen_HK
dc.rightsEuropean Journal of Operational Research. Copyright © Elsevier BV.en_HK
dc.subjectInventoryen_HK
dc.subjectPricingen_HK
dc.subjectRetailingen_HK
dc.subjectSupply chain managementen_HK
dc.titleEffects of a demand-curve's shape on the optimal solutions of a multi-echelon inventory/pricing modelen_HK
dc.typeArticleen_HK
dc.identifier.openurlhttp://library.hku.hk:4550/resserv?sid=HKU:IR&issn=0377-2217&volume=147/3&spage=530&epage=548&date=2003&atitle=Effects+of+a+Demand-Curve%27s+Shape+on+the+Optimal+Solutions+of+a+Multi-Echelon+Inventory/Pricing+Model%27en_HK
dc.identifier.emailLau, AHL: ahlau@business.hku.hken_HK
dc.identifier.authorityLau, AHL=rp01072en_HK
dc.description.naturelink_to_subscribed_fulltext-
dc.identifier.doi10.1016/S0377-2217(02)00291-6en_HK
dc.identifier.scopuseid_2-s2.0-0037449228en_HK
dc.identifier.hkuros91999en_HK
dc.relation.referenceshttp://www.scopus.com/mlt/select.url?eid=2-s2.0-0037449228&selection=ref&src=s&origin=recordpageen_HK
dc.identifier.volume147en_HK
dc.identifier.issue3en_HK
dc.identifier.spage530en_HK
dc.identifier.epage548en_HK
dc.identifier.isiWOS:000181578300007-
dc.publisher.placeNetherlandsen_HK
dc.identifier.scopusauthoridLau, AHL=7202626080en_HK
dc.identifier.scopusauthoridLau, HS=7201497264en_HK

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