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Integrated inventory and transportation decision for ubiquitous supply chain management

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Abstract

We consider price-dependent demand and develop an integrated inventory and transportation policy with strategic pricing to maximize the total profit for a ubiquitous enterprise. The proposed policy provides the optimal ordering, shipment and pricing decision. We first assume that demand for a product is a linear function of the price. A mathematical model for the total profit under quantity based dispatch is developed in consideration of ordering, shipment and pricing variables. Optimality properties for the model are then obtained and an efficient algorithm is provided to compute the optimal parameters for ordering, shipment and pricing decision. Finally, we extend our results to a more general case where demand for the product is a convex or a concave function of the price.

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Authors and Affiliations

  1. Graduate School of Information Management and Security, Korea University, Anamdong 5-ga, Seongbuk-gu, Seoul, 136-713, Republic of Korea

    Ki-sung Hong

  2. Division of Computer Engineering, Mokwon University, Daejeon, 302-729, Republic of Korea

    Sang Soo Yeo

  3. Graduate School of Information Security, Korea University, Anamdong 5-ga, Seongbuk-gu, Seoul, 136-713, Republic of Korea

    Hyoung Joong Kim

  4. Department of Industrial & Systems Engineering, National University of Singapore, 10 Kent Ridge Crescent, Singapore, 119260, Singapore

    Ek Peng Chew

  5. Division of Industrial Management Engineering and Graduate School of Management of Technology, Korea University, Anamdong 5-ga, Seongbuk-gu, Seoul, 136-713, Republic of Korea

    Chulung Lee

Authors
  1. Ki-sung Hong
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  2. Sang Soo Yeo
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  3. Hyoung Joong Kim
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  4. Ek Peng Chew
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  5. Chulung Lee
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Correspondence to Chulung Lee.

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Hong, Ks., Yeo, S.S., Kim, H.J. et al. Integrated inventory and transportation decision for ubiquitous supply chain management. J Intell Manuf 23, 977–988 (2012). https://doi.org/10.1007/s10845-011-0581-x

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  • DOI: https://doi.org/10.1007/s10845-011-0581-x

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