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Articles

Decisions on the Minimum Order Quantity of Supply Chain Based on Asymmetric Demand Information

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  • 1. School of Management, Hefei University of Technology, Hefei 230009, China;
    2. Key Laboratory of Process Optimization and Intelligent Decision-making, Ministry of Education, Hefei 230009, China

Received date: 2013-07-24

  Revised date: 2014-05-05

  Online published: 2015-07-22

Abstract

In a two-hierarchical decentralized supply chain composed of a supplier and a retailer, the supplier generally protects his/her own profits by means of determining minimum order quantity (MOQ). Sometimes demand information is asymmetrical between the supplier and the retailer; that is, the retailer catches the complete demand information but the supplier only knows the distribution of price-sensitive factor in the demand information. In this situation, how to determine MOQ becomes an important problem that the supplier faces. For this problem, from the marketing point of view, a profit maximization model is constructed based on Stackelberg game. Suppose the supplier knows that the price-sensitive factor in the demand follows normal distribution. The optimal MOQ in the model is then determined by strict mathematical deduction. The proposed determination method of the optimal MOQ is applied in the sales supply chain to determine the optimal minimum storage capacity sold by cloud storage supplier, which demonstrates the rationality and validity of the proposed method. Experimental results show that setting MOQ by the proposed method exactly increases the profits of the supplier. More important, the proposed method can significantly promote the research on supply chain coordination considering MOQ.

Cite this article

DING Ping, FU Chao, XIAO Ming, ZHAO Jing . Decisions on the Minimum Order Quantity of Supply Chain Based on Asymmetric Demand Information[J]. Chinese Journal of Management Science, 2015 , 23(6) : 99 -106 . DOI: 10.16381/j.cnki.issn1003-207x.201.06.013

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