A linkage of Markdown Pricing with aggregate production planning

This paper is to study the significance of the cooperation between the markdown policy and the aggregate planning so as to simulate the cooperation between retailers and manufacturers. A fuzzy nonlinear programming model, named Aggregate Production Planning-Markdown Pricing Model (APP-MP), is established by integrating the markdown model into Aggregate Production Planning model. Due to the uncertainty of business information and environment, some cost elements are considered to be fuzzy number so that the objective function is fuzzy in nature. The fuzzy programming model is transformed into a crisp parametric model to be solved. The parametric APP-MP is able to help the retailer and the manufacturer flexibly make the pricing decisions, including the magnitude and time of markdown, and production decisions based on different satisfaction levels so that greater profits could be obtained. The example solution shows that the cooperation definitely increases the profits.