Optimising pricing and inventory in a supply chain with supply-hub (Q2224286)

Summary: This paper focuses on joint decision making about pricing and inventory in a three level supply chain composed of multi suppliers, one supply-hub and one manufacturer. The problem is modelled as a three-stage game. Firstly, the manufacturer determines its margin. Secondly, the supply-hub determines its replenishment policy. Finally, each supplier determines its wholesale price, production lot size and delivery lot size to the supply-hub. An analytical and computational method is proposed to solve the game model. A numerical study has been conducted to demonstrate how the algorithm works and to understand the influences of decision variables and profits of the three entities, we draw some management insights through this study.