A Bilevel Programming Model for a Cohesive Decision-Making on Strategic Pricing and Production Distribution Planning for a Small-Scale Supplier

Abstract

This research develops a decision support for strategic pricing and aggregate production distribution planning for a small-scale supplier intending to penetrate into a potential market engendered by a single buyer. A novel mixed integer bilevel programming model is proposed to formulate the problem in which the supplier is considered as a leader and the buyer is a follower. The proposed model subsumes the assessment of demand share against the price quotation, enabling the supplier to prepare an aggregate production distribution plan accordingly. An integer coded genetic algorithm is used to solve the model and its implementation is exhibited through a test scenario.