• May 15, 2019 News!Vol.7, No.5- Vol.8, No.4 has been indexed by EI (Inspec).   [Click]
  • Aug 01, 2018 News! [CFP] 2020 the annual meeting of IJMO Editorial Board, ECDMO 2020, will be held in Athens, Greece, February 15-17, 2020.   [Click]
  • Sep 30, 2019 News!Vol 9, No 6 has been published with online version. 12 original aritcles from 6 countries are published in this issue.    [Click]
General Information
    • ISSN: 2010-3697  (Online)
    • Abbreviated Title: Int. J. Model. Optim.
    • Frequency: Bimonthly
    • DOI: 10.7763/IJMO
    • Editor-in-Chief: Prof. Adrian Olaru
    • Executive Editor: Ms.Yoyo Y. Zhou
    • Abstracting/ Indexing: ProQuest, Crossref, Electronic Journals Library, Google Scholar, EI (INSPEC, IET), EBSCO, etc.
    • E-mail ijmo@iacsitp.com
Prof. Adrian Olaru
University Politehnica of Bucharest, Romania
I'm happy to take on the position of editor in chief of IJMO. It's a journal that shows promise of becoming a recognized journal in the area of modelling and optimization. I'll work together with the editors to help it progress.
IJMO 2019 Vol.9(1): 12-17 ISSN: 2010-3697
DOI: 10.7763/IJMO.2019.V9.676

An Application of Bilevel Optimization in Pricing and Leasing Strategy

Suthee Thitiananpakorn and Pisit Jarumaneeroj
Abstract—This paper focuses on the finding of an optimal pricing and leasing strategy for both the third-party warehouse and customers, whose conflicts lie on their contradictory objective functions, via bilevel optimization approach. Bilevel optimization is a game-based approach where the third-party warehouse is a leader, who first decides the price of short and long-term rental contracts taking the behavioral reaction of other players, that is, customers and its competitor, into consideration. Once observed, customers then decide which contracts to be chosen so that their objectives are optimized. While complicated, under certain assumptions, we can show that closed-form solutions could be derived. Our experimental results indicate that competitor storage price significantly affects both third-party warehouse’s profit and all of its customer’s total costs. Besides, large customer tends to suffer more from high opportunity cost; but, the delivery cost charged by the third-party warehouse is crucial for small customer’s rental decision.

Index Terms—Bilevel programming, game theory, storage pricing, third-party warehouse

The authors are with the Department of Industrial Engineering, Faculty of Engineering, Chulalongkorn University, Bangkok, Thailand (e-mail: Suthee.T@student.chula.ac.th and Pisit.ja@chula.ac.th).


Cite: Suthee Thitiananpakorn and Pisit Jarumaneeroj, "An Application of Bilevel Optimization in Pricing and Leasing Strategy," International Journal of Modeling and Optimization vol. 9, no. 1, pp. 12-17, 2019.

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E-mail: ijmo@iacsitp.com