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In this paper we study the push and pull model of supply chain with a price-sensitive demand, in which a supplier sells a single product to competing retailers who then sell the product with the market price that equates the total supply with demand, and compare the performance of supply chain between these two different models. We prove that for the multiplicative form of end-customer demand, at optimality, the wholesale price, order quantity and the retail price in pull model are greater than in push model, respectively. We further demonstrate that there is an interesting contrast: the supplier obtains greater profit in pull models than in push model, but each retailer obtains less profit in push model than in push model.
Date of Conference: 12-14 Oct. 2008