A TWO-ECHELON SUPPLY CHAIN MODEL WITH TIME-VARYING SELLING PRICE AND DEMAND RATE

Prices of hi-tech products usually decline with the passage of time because of rapid technical modernization and universal competitiveness as well as after-sales high servicing and maintenance cost. In this paper, we develop a two-echelon supply chain model wherein a manufacturer supplies a single high-tech product to a retailer under lot-for-lot policy. The retail price of the product is assumed to be the sum of basic price (which is taken as a retail fixed markup over the manufacturer's wholesale price) and a variable price (which is inversely related to the servicing and maintenance cost). Assuming that the retailer's demand is dependent on the retail price, the integrated as well as decentralized models with continuous and discrete-time selling prices are developed. For numerical examples, the developed models are illustrated and the sensitivity of model-parameters is examined. It is observed that, between the two dynamic pricing policies, the discrete-time selling price policy is superior to the continuous-time selling price policy.