Bi-level vendor-buyer strategies for a time-varying product price

In recent years, two-echelon inventory system has been widely studied by many researchers. Most researches focused on joint integrated model, and very few have applied the bi-level strategies. To conform more to real life, this paper considers a bi-level decision where a vendor or a buyer takes the role of a leader or a follower. We present a bi-level programming formulation for a time-varying product price. A bi-level elitist genetic algorithm is presented to solve the proposed nonlinear bi-level programming problem. Density information is coordinated in the proposed approach to improve the optimal solutions. An experimental data is used to compare the bi-level strategy with the integrated approach.