The Joint Decision of Procurement and Pricing Interacted with Uncertain Demand

There are three decision variables including order quantity, pricing and advertising to retailer in a given sales for a certain product. Nowadays advertising is usually done by manufacturer.So the joint decision of procurement and pricing is important to retailer.The previous studies under uncertain demand usually assumed that demand functions fit a kind of probability distribution with certain parameters.But in practice the demand distribution function is affected by the decision variables.So we focus on this practical problem and build the demand distribution function including pricing,advertising and consumer characters.We design the decision model of procurement and pricing interacted with the demand distribution function and calculate the equilibrium solution for retailer.Finally we verify our model using numerical study.Our model is practical and can decrease the risk of demand change caused by decision adjustment.