Competitive pricing in reliable supply chain with uncertainty

Document Type: Research Paper

Authors

1 k.n.toosi university

2 Department of Industrial Engineering, K.N. Toosi University of Technology, Tehran, Iran

Abstract

Natural catastrophes or man-made mistakes cause a great economic loss in various industries. Because of that, managing supply chains in a reliable manner has become a significant concern for decision makers. More precisely, any devastation insupply chain’s elements reduce the overall revenue. In this study, we strive to maximize the total profit of distribution centers (DCs) with a set of retailers by considering risk of disruptions for facilities. Moreover, a game-theoretic approach is employed to simultaneously investigate the impacts of facility location, inventory management, breakdown of facilities and pricing strategies in a three-echelon supply chain. Various numerical experiments are generated to assess the accuracy of achieved solutions. In the following, a sensitivity analysis is performed for some specific parameters to recognize the most important factors affecting the system's performance. The results show that considering disruptions helps to provide a more accurate estimation for the system. Finally, the value of the stochastic solution (VSS) is used to justify that putting extra efforts into formulating and solving stochastic programming is worthwhile.

Keywords

Main Subjects


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