Multi-objective framework for process mean selection and price differentiation with leakage effects under price-dependent stochastic demand Academic Article uri icon


  • © 2018 Elsevier Ltd This paper investigates the process mean selection problem that simultaneously considers pricing, production and quality decisions in a multi-objective context when the manufacturing firm experiences a demand leakage in simultaneously observed price-dependent stochastic demand. The output of the manufacturing process is segregated into two grades sold in primary and secondary markets using a differentiation price as the market segmentation tool. Nonconforming items are reworked at an additional cost and only price-dependent stochastic demand with leakage effects is assumed. Three objectives, expected gross income from sales, expected profit and expected product uniformity are considered in the proposed multi-objective optimization model. Two solution algorithms are proposed, a goal programming approach combined with a simulation based optimization and a multi-objective genetic algorithm. A detailed numerical experimentation is employed to compare the two algorithms.

author list (cited authors)

  • Raza, S. A., Abdullakutty, F. C., Rathinam, S., & Govindaluri, S. M.

citation count

  • 8

publication date

  • January 2019