ANALYZING THE BEHAVIOR OF COMPETING FIRMS IN MARKETS WITH PRICE-LEAD TIME-AND INVENTORY LEVEL-SENSITIVE DEMAND

In today's competitive world, decision making for pricing, inventory control policy and lead time, are important challenging issues in non-exclusive markets. The lead time should be determined in a way that inventory of rms, can provide the market demand and also it should not be too long. This study examines the behavior of rms face to variables demand rate depending on selling price, lead time and the inventory level. The model has been extended for a single product in supply chain. Here is assumed that the shortage is not allowed and market demand is a function of the amount of inventory and price of goods sold. This problem is analyzed and mathematically modeled under two scenarios. In the rst scenario the eects of price, lead time and inventory on hand in a single company has been investigated and in the second scenario, the behavior of two competing rms in a non-exclusive market, using the Nash approach is analyzed. Where, both rms, without being informed by each other are competing under a non-cooperative game and each of them is trying to maximize the prot function. Decisions about the appropriate lead time, selling prices and inventory levels as decision variables of the problem are made so that the rm's prot is maximized. In numerical examples section, for each of decision variables and parameters of the model, some comparisons have done and the optimal values are obtained. Moreover, sensitive analysis conducted on various parameters of problem. Finally, from sensitivity analysis, we observed that with setting the price elasticity and inventory elasticity of demand, lead time can be managed and maximum prot is achieved. The results of numerical examples indicate that the maximum prot for the rms in the second scenario is achieved when the share of both rms, in providing the required inventory of market is equal. From the sensitivity analysis if other parameters are remained constant, when lead time is increased, the inventory levels increases and lead to a prolonged response.