Supplier’s Decision under Fixed Wholesale Price and Normally Distributed Demand


Manoj Kumar, Jyoti Raman, Priya Singh

Author affiliation

International Engineering Services, H.No.- 87A, RZI – Block, West Sagarpur, New Delhi – 110046, India


A two-echelon supply chain is considered with two retailers and one supplier. The retailers are supplied by the supplier who makes all the decisions and bears all the inventory risk. Throughout this paper, two different inventory systems are considered: a reserved inventory system and a pooled inventory system. With the reserved inventory system, the supplier keeps separate inventories for each retailer. In contrast, the pooled inventory is shared by the two retailers and the supplier makes the inventory decision based on the joint demand. Under different scenarios such as whether wholesale price is a decision variable, the supplier’s decisions are studied and analyzed in the reserved and the pooled inventory systems. In addition, the profit of the supplier and retailers are compared in the two different systems under normally distributed demands.


Supply chain; reserved Inventory; pooled inventory; pricing; normally distributed demands