Joint Pricing And Inventory Decision For Competitive Products
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Joint Pricing And Inventory Decision For Competitive Products
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Author : Kelly Yunqing Ye
language : en
Publisher:
Release Date : 2008
Joint Pricing And Inventory Decision For Competitive Products written by Kelly Yunqing Ye and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2008 with categories.
We consider the joint pricing and inventory decision problem for a single retailer who orders, stocks and sells multiple products. The products are competitive in nature, e.g., these maybe similar products from multiple brands. Demand for a product depends on its price as well as the price of all competing products. We show that the optimal pricing and inventory policy is similar to the base-stock, list-price policy which is known to be optimal for the single product case. In addition, the base-stock level of each product is nonincreasing with the inventory level of other products. This structure suggests that one can improve profit by simultaneously managing all the products rather than managing each product independently of other products.
Joint Pricing And Inventory Decisions For Substitutable Products
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Author : Guillermo Gallego
language : en
Publisher:
Release Date : 2020
Joint Pricing And Inventory Decisions For Substitutable Products written by Guillermo Gallego and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2020 with categories.
A pervasive problem for retailers is to make assortment and inventory procurement decisions of substitutable products with the goal of maximizing expected profits over a pre-defined selling horizon. Multiple inventory replenishments are not allowed. This problem is challenging because of demand substitution effects that are driven initially by the assortment decision and later by stockouts. We propose intuitive and easy-to-implement heuristic based on the sample average approximation method coupled with the Markov chain approximation to discrete choice modelling. We show that our heuristic is asymptotically optimal, and quite effective even in the non-asymptotic regime. Our heuristic exhibits very small optimality gaps and outperform, sometimes dramatically, traditional newsvendor solutions that ignore dynamic substitution effects. Our numerical analysis also reveals that the newsvendor heuristic may perform quite well when the assortment is properly chosen and demand variability is relatively low. These managerial insights help decide when to employ the traditional newsvendor solution. We also look into endogenous pricing and show that even a simple heuristic can significantly enhance profits if prices can be adjusted sufficiently often. Another finding is that price flexibility mitigates the need for safety stocks to the point that not hedging inventories is often better than hedging them.
Joint Pricing And Inventory Decisions For Substitutable Perishable Products Under Demand Uncertainty
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Author : Fei Fang
language : en
Publisher:
Release Date : 2016
Joint Pricing And Inventory Decisions For Substitutable Perishable Products Under Demand Uncertainty written by Fei Fang and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016 with categories.
Joint Pricing And Inventory Policies For Make To Stock Products With Deterministic Price Sensitive Demand
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Author : Saibal Ray
language : en
Publisher:
Release Date : 2007
Joint Pricing And Inventory Policies For Make To Stock Products With Deterministic Price Sensitive Demand written by Saibal Ray and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2007 with categories.
In this paper, we focus on a firm selling a single make-to-stock product to price-sensitive end customers. We develop an integrated operations-marketing model that can help determine the relevant profit-maximizing decision variable values for two pricing policies that the firm might follow - price as a decision variable, which is advocated by academicians, and mark-up pricing, used by most practitioners. We first consider an EOQ-based model with price and order quantity as independent decision variables. We then develop an analogous model where price is a mark-up over operating costs per unit, and order quantity becomes the sole decision variable. We are able to ascertain the optimal decision variable values for each model for log-linear and linear demand functions. We prove that for such profitmaximizing models, the optimal batch size is not necessarily monotone increasing in set-up cost. Interestingly, our numerical/analytical evidence suggests that from a profit perspective it is better for managers to be aggressive on price rather than reducing price too much, especially for highly price-sensitive and non-linear demand. Moreover, we establish that, in general, the profit penalty for not including inventory costs in determining the optimal batch size, or ignoring the batch size optimization issue in a mark-up price model is not significant. Only when the set-up cost is quite high and/or the firm faces non-linear demand from highly price-sensitive end consumers does it become crucial for managers to determine the exact optimal batch size and base the mark-up price on the entire unit operating cost, not only the unit (variable) production cost.
Joint Pricing And Inventory Control For Perishable Products
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Author : Yanzhi Li
language : en
Publisher:
Release Date : 2006
Joint Pricing And Inventory Control For Perishable Products written by Yanzhi Li and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2006 with Inventory control categories.
Dynamic Pricing And Inventory Management
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Author : Renyu Philip Zhang
language : en
Publisher:
Release Date : 2016
Dynamic Pricing And Inventory Management written by Renyu Philip Zhang and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016 with Electronic dissertations categories.
We develop the models and methods to study the impact of some emerging trends in technology, marketplace, and society upon the pricing and inventory policy of a firm. We focus on the situation where the firm is in a dynamic, uncertain, and (possibly) competitive market environment. The market trends of particular interest to us are: (a) social networks, (b) sustainability concerns, and (c) customer behaviors. The two main running questions this dissertation aims to address are: (a) How these emerging market trends would influence the operations decisions and profitability of a firm; and (b) What pricing and inventory strategies a firm could use to leverage these trends. We also develop an effective comparative statics analysis method to address these two questions under different market trends. Overall, our results suggest that the current market trends of social networks, sustainability concerns, and customer behaviors have significant and interesting impact upon the operations policy of a firm, and that the firm could adopt some innovative pricing and inventory strategies to exploit these trends and substantially improve its profit. Our main findings are: (a) Network externalities (the monopoly setting). We find that network externalities prompt a firm to face the tradeoff between generating current profits and inducing future demands when making the price and inventory decisions, so that it should increase the base-stock level, and to decrease [increase] the sales price when the network size is small [large]. Our extensive numerical experiments also demonstrate the effectiveness of the heuristic policies that leverage network externalities by balancing generating current profits and inducing demands in the near future. (Chapter 2.) (b) Network externalities (the dynamic competition setting). In a competitive market with network externalities, the competing firms face the tradeoff between generating current profits and winning future market shares (i.e., the exploitation-induction tradeoff). We characterize the pure strategy Markov perfect equilibrium in both the simultaneous competition and the promotion-first competition. We show that, to balance the exploitation-induction tradeoff, the competing firms should increase promotional efforts, offer price discounts, and improve service levels. The exploitation-induction tradeoff could be a new driving force for the fat-cat effect (i.e., the equilibrium promotional efforts are higher under the promotion-first competition than those under the simultaneous competition). (Chapter 3.) (d) Trade-in remanufacturing. We show that, with the adoption of the very commonly used trade-in remanufacturing program, the firm may enjoy a higher profit with strategic customers than with myopic customers. Moreover, trade-in remanufacturing creates a tension between firm profitability and environmental sustainability with strategic customers, but benefits both the firm and the environment with myopic customers. We also find that, with either strategic or myopic customers, the socially optimal outcome can be achieved by using a simple linear subsidy and tax scheme. The commonly used government policy to subsidize for remanufacturing alone, however, does not induce the social optimum in general. (Chapter 4.) (d) Scarcity effect of inventory. We show that the scarcity effect drives both optimal prices and order-up-to levels down, whereas increased operational flexibilities (e.g., the inventory disposal and inventory withholding opportunities) mitigate the demand loss caused by high excess inventory and increase the optimal order-up-to levels and sales prices. Our extensive numerical studies also demonstrate that dynamic pricing leads to a much more significant profit improvement with the scarcity effect of inventory than without. (Chapter 5.) (e) Comparative statics analysis method. We develop a comparative statics method to study a general joint pricing and inventory management model with multiple demand segments, multiple suppliers, and stochastically evolving market conditions. Our new method makes componentwise comparisons between the focal decision variables under different parameter values, so it is capable of performing comparative statics analysis in a model where part of the decision variables are non-monotone, and it is well scalable. Hence, our new method is promising for comparative statics analysis in other operations management models. (Chapter 6.)
Joint Pricing And Inventory Decisions For Substitutable And Perishable Product
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Author : Aylin Polat
language : en
Publisher:
Release Date : 2013
Joint Pricing And Inventory Decisions For Substitutable And Perishable Product written by Aylin Polat and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013 with Inventory control categories.
Joint Pricing And Inventory Management With Strategic Customers
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Author : Yiwei Chen
language : en
Publisher:
Release Date : 2018
Joint Pricing And Inventory Management With Strategic Customers written by Yiwei Chen and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2018 with categories.
We consider a model wherein the seller sells a product to customers over an infinite horizon. At each time, the seller decides a set of purchase options offered to customers and the inventory replenishment quantity. Each purchase option specifies a price and a product delivery time. Customers are infinitesimal and arrive to the system with a constant rate. Customer product valuations are heterogenous and follow a stationary distribution. A customer's arrival time and product valuation are his private information. Customers are forward looking, i.e., they strategize their purchasing times. A customer incurs delay disutility from postponing to place an order and waiting for the product delivery. A customer's delay disutility rate is perfectly and positively correlated with his valuation. The seller has zero replenishment lead time. The seller incurs fixed ordering cost and inventory holding cost. The seller seeks a joint pricing, delivery and inventory policy that maximizes her long-run average profit. Through a tractable upper bound constructed by solving a mechanism design problem, we derive an optimal joint pricing, delivery and inventory policy, which is a simple cyclic policy. We also extend our policy to a stochastic setting and establish its asymptotic optimality.
Pricing Variety And Inventory Decisions Under Nested Logit Consumer Choice
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Author : Sari Rida Kalakesh
language : en
Publisher:
Release Date : 2006
Pricing Variety And Inventory Decisions Under Nested Logit Consumer Choice written by Sari Rida Kalakesh and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2006 with categories.
Retail represents the second largest industry in the United States with nearly $ 4 trillion in annual revenues and a large capital tied-up in retail inventories. However, the Marketing and Economics literature typically study pricing and var iety (assortment) decisions while ignoring inventory costs. This project incorpo rates the important effects of inventory on pricing and variety decisions for a retailer's product line composed of substitutable items. The retailer's custome rs make their buying decisions for items in the product line based on a random u tility function. A popular model for consumer utility (choice) in this situation is the Multinomial Logit Choice (MNL) model. However, MNL suffers from the inde pendence from irrelevant alternative (IIA) property, which basically implies tha t items in the product line are broadly similar. A remedy to this limitation is to adopt a Nested Multinomial Logit (NMNL) choice model, an enhancement of the M NL, which has received little attention in the retail literature. In this project, we study pricing, variety and inventory decisions under NMNL co nsumer choice and within a single-period newsvendor-type inventory setting. We d erive a close-form expression for the retailers expected profit function of pric es, assortment, and inventory levels. We then numerically analyze the structure of a retailer's optimal assortment, prices and inventory levels. To enhance our understanding of the problem, we develop models of different flavors involving d eciding on two out of three basic pricing, variety and inventory decisions befor e considering all three decisions jointly. Specifically, we start by analyzing p ricing and variety decisions while assuming ample supply (i.e., infinite invento ry levels). We then study a second situation where prices are exogenously fixed and the retailer decides on variety and inventory levels. We finally study a thi rd, and perhaps most important, situation where the retailer jointly decides on pricing, variety and inventory. We observe that the optimal prices, assortment and inventory levels have simple structure in all three situations. This sugges ts that "good" practical solutions for the complex problem of joint pricing, var iety and inventory decisions within the realistic setting we consider could be o btained with ease.
Joint Product Pricing
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Author : Fouad Sabry
language : en
Publisher: One Billion Knowledgeable
Release Date : 2024-02-03
Joint Product Pricing written by Fouad Sabry and has been published by One Billion Knowledgeable this book supported file pdf, txt, epub, kindle and other format this book has been release on 2024-02-03 with Business & Economics categories.
What is Joint Product Pricing In microeconomics, joint product pricing is the firm's problem of choosing prices for joint products, which are two or more products produced from the same process or operation, each considered to be of value. Pricing for joint products is more complex than pricing for a single product. To begin with, there are two demand curves. The characteristics of each could be different. Demand for one product could be greater than for the other. Consumers of one product could be more price elastic than consumers of the other. How you will benefit (I) Insights, and validations about the following topics: Chapter 1: Joint product pricing Chapter 2: Monopoly Chapter 3: Monopolistic competition Chapter 4: Supply and demand Chapter 5: Deadweight loss Chapter 6: Economic surplus Chapter 7: Price discrimination Chapter 8: Elasticity (economics) Chapter 9: Economic equilibrium Chapter 10: Consumer choice Chapter 11: Substitute good Chapter 12: Substitution effect Chapter 13: Allocative efficiency Chapter 14: Overproduction Chapter 15: Demand curve Chapter 16: Tax incidence Chapter 17: Pricing strategies Chapter 18: Demand Chapter 19: Supply (economics) Chapter 20: Derived demand Chapter 21: Margin (economics) (II) Answering the public top questions about joint product pricing. (III) Real world examples for the usage of joint product pricing in many fields. Who this book is for Professionals, undergraduate and graduate students, enthusiasts, hobbyists, and those who want to go beyond basic knowledge or information for any kind of Joint Product Pricing.