The influence of supply chain disruptions on pricing and inventory decisions, by Joris Corstens
June 7, 2013
Due to an increased focus on Just-in-Time principles supply chain disruptions have exhibited a devastating impact on the prots of global or locally operating companies. On the contrary, companies try to boost their prot by jointly or sequentially examining pricing and inventory decisions. In this thesis supply chain disruptions are incorporated in a pricing and inventory model. By using this model a combined inventory and pricing policy for mitigation of disruption risk is developed. This policy is characterized as follows: inventory management is done according to a base-stock policy. If net inventory is below or equal to a pricing reference inventory level the price is increased with a percentage. The effects of using this policy on a single retailer’s revenue, costs and prot for different scenarios are examined.