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Optimal dynamic policies for integrated production and marketing planning in business-to-business marketplaces

Authors
Journal
International Journal of Production Economics
0925-5273
Publisher
Elsevier
Volume
153
Identifiers
DOI: 10.1016/j.ijpe.2014.04.002
Keywords
  • Production And Marketing Integration
  • Business-To-Business
  • E-Marketplaces
Disciplines
  • Communication
  • Computer Science

Abstract

Abstract This work develops optimal dynamic policies for integrated production and marketing planning in a vertically decentralized single-manufacturer and single-retailer channel over a multi-period planning horizon, subject to deteriorating goods and a multivariate demand function. This work formulates the discount profit maximization problem, and provides inter-enterprise dynamic joint decisions for retail price and replenishment schedule/quantity using a calculus-based formulation combined with dynamic programming. Additionally, two alternatives for doing business, namely, retailer-managed inventory with a price-only contract and vendor-managed inventory (VMI) with a consignment contract, are applied to business-to-business traditional marketplaces (TMs) and electronic marketplaces (EMs), respectively. Numerical results demonstrate that solutions generated in EMs outperform those in TMs in terms of maximizing channel-wide total discount profits and those of manufacturer and retailer. Further, analytical results show that the proposed policy under VMI with a consignment contract in EMs significantly increases system efficiency and simultaneously achieves Pareto improvements using an extra one-part tariff for the decentralized channel.

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