Order decision making based on different statement strategies under stochastic market demand

Abstract

Based on the stochastic market demand, this paper considers the order decision-making strategies of the supply chain by introducing statement strategies. Consequently, the time-variant variance in the demands of the market is incorporated into the model. The retailer simultaneously determines the purchase time (i.e., lead time) and order quantity, and the manufacturer determines the statement strategy and the reserved profit rate. The results show that the no overtime statement strategy can induce the retailer to place more orders in advance by limiting the available order quantity within the available time. Finally, we also adopt numerical examples to support the conclusion of this paper.

Keywords

Stochastic demand / cost-oriented / statement strategy / lead time

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