NDLI: The impacts of pricing schemes on decentralized assembly systems

Content Provider	Springer Nature Link
Author	Jiang, Li
Copyright Year	2008
Abstract	We study an assembly system where one assembler produces a final product to satisfy the price sensitive and uncertain demands. One unit of final product needs inputs from n complementary components each provided from a distinct supplier. The assembler orders from the suppliers and their relationships are governed by price-only contracts. The assembler practices two alternative pricing schemes: a fixed pricing scheme by which she fixes a retail price in all market situations, and a responsive pricing scheme by which she adjusts retail prices after observing actual demand curves. We find that, when the assembler practices the two pricing schemes, the suppliers charge the same wholesale prices, channel profit is allocated among the firms according to the same proportions, and the relative performances of the system under decentralized decision makings with respect to those under centralized decision makings are the same. Furthermore, responsive pricing improves the assembler’s absolute performance, and the gains pass over to the suppliers in terms of higher profits and to the customers in terms of enhanced product availability and lowered market price.
Starting Page	36
Ending Page	49
Page Count	14
File Format	PDF
ISSN	10043756
Journal	Journal of Systems Science and Systems Engineering
Volume Number	17
Issue Number	1
e-ISSN	18619576
Language	English
Publisher	SP Systems Engineering Society of China
Publisher Date	2008-03-06
Publisher Place	Heidelberg
Access Restriction	One Nation One Subscription (ONOS)
Subject Keyword	Pricing assembly system decentralization Operations Research/Decision Theory Game Theory/Mathematical Methods Systems and Information Theory in Engineering
Content Type	Text
Resource Type	Article
Subject	Control and Systems Engineering Information Systems

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1	Ministry of Education (GoI), Department of Higher Education	Sanctioning Authority	https://www.education.gov.in/ict-initiatives
2	Indian Institute of Technology Kharagpur	Host Institute of the Project: The host institute of the project is responsible for providing infrastructure support and hosting the project	https://www.iitkgp.ac.in
3	National Digital Library of India Office, Indian Institute of Technology Kharagpur	The administrative and infrastructural headquarters of the project	Dr. B. Sutradhar bsutra@ndl.gov.in
4	Project PI / Joint PI	Principal Investigator and Joint Principal Investigators of the project	Dr. B. Sutradhar bsutra@ndl.gov.in Prof. Saswat Chakrabarti will be added soon
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