A Multiobjective Distribution-Pricing Model for Multiperiod Price-Sensitive Demands

Abstract

In this paper, a new multiobjective model is proposed in order to determine the pricing and distribution plans for a wholesaler and its local distributors. Each local distributor has its own price-sensitive demand over the planning horizon. The model illustrates the conflict between the objectives pursued by the wholesaler (total profit maximization) and the local distributors (maximization of service levels). The model considers selling price, realized demand, production quantity, inventory levels, shortages, and inventory deterioration. The exact relationship between the two objectives is extracted. The model is applied to a case study of a wholesaler that distributes supplementary nutrition items to a set of local distributors. A new solution method is proposed for practically obtaining a set of global Pareto-optimal solutions of the problem. Each Pareto-optimal solution can be considered as a negotiation scenario between the wholesaler and the local distributors. The proposed solution is capable of finding all global Pareto-optimal solutions of the problem in certain conditions. Also, the proposed heuristic determines the most favorable solution among the set of Pareto-optimal solutions obtained. Finally, the computational results of the real case study are highlighted along with conclusions and future research directions.

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