On the benefit of inventory-based dynamic pricing strategies

Production and Operations Management

Volumn 19, Issue 3, 2010, Pages 249-260

  Chen, Hong ^a,b   Wu, Owen Q ^c   Yao, David D ^d  

^a UNIVERSITY OF BRITISH COLUMBIA   (Canada)

^b CHINA EUROPE INTERNATIONAL BUSINESS SCHOOL   (China)

^c UNIVERSITY OF MICHIGAN   (United States)

^d Columbia University ^*  (United States)

Author keywords

Brownian demand model; Demand variability; Dynamic pricing; Joint inventory and pricing decisions

Indexed keywords

EID: 77953496191     PISSN: 10591478     EISSN: None     Source Type: Journal    
DOI: 10.1111/j.1937-5956.2009.01099.x     Document Type: Article

References (32)

1. Aguirregabiria, V. 1999. The dynamics of markups and inventories in retailing firms. Rev. Econ. Stud. 66 (2): 275-308.
2. Bather, J. A. 1966. A continuous time inventory model. J. Appl. Probab. 3 (2): 538-549.
3. Benkherouf, L. 2007. On a stochastic inventory model with a generalized holding costs. Eur. J. Oper. Res. 182 (2): 730-737.
4. Bensoussan, A., R. H. Liu, S. P. Sethi. 2005. Optimaliry of an (s, S) policy with compound Poisson and diffusion demands: A quasi-variational inequalities approach. SIAM J. Control Optim. 44 (5): 1650-1675.
5. Beyer, D. 1994. An inventory model with Wiener demand process and positive lead time. Optimization 29 (2): 181-193.
6. Byrnes, J. 2003 Dell manages profitability, not inventory. Harvard Business School Working Knowledge, June. Available at http://hbswk.hbs.edu/ archive/3497.html (accessed July 31, 2009).
7. Chan, L. M. A., Z. J. Shen, D. Simchi-Levi, J. L. Swann. 2004. Coordination of pricing and inventory decisions: A survey and classification. Simchi-Levi, D., D. Wu, Z. J. Shen (eds). Handbook of Quantitative Supply Chain Analysis: Modeling in the E-Business Era. Kluwer Academic Publishers, Boston, MA, 335-392.
8. Chao, H. 1992. The EOQ model with stochastic demand and discounting. Eur. J. Oper. Res. 59: 434-443.
9. Chen, F. Y., S. Ray, Y. Song. 2006. Optimal pricing and inventory control policy in periodic-review systems with fixed ordering cost and lost sales. Nav. Res. Logist. 53 (2): 117-136.
10. Chen, H., D. D. Yao. 2001. Fundamentals of Queueing Networks: Performance, Asymptotics and Optimization. Springer-Verlag, New York.
11. Chen, X., D. Simchi-Levi. 2004a. Coordinating inventory control and pricing strategies with random demand and fixed ordering cost: The finite horizon case. Oper. Res. 52 (6): 887-896.
12. Chen, X., D. Simchi-Levi. 2004b. Coordinating inventory control and pricing strategies with random demand and fixed ordering cost: The infinite horizon case. Math. Oper. Res. 29 (3): 698-723.
13. Chen, X., D. Simchi-Levi. 2006. Coordinating inventory control and pricing strategies: The continuous review model. Oper. Res. Lett. 34 (3): 323-332.
14. Constantinides, G. M., S. F. Richard. 1978. Existence of optimal simple policies for discounted-cost inventory and cash management in continuous time. Oper. Res. 26 (4): 620-636.
15. Elmaghraby, W., P. Keskinocak. 2003. Dynamic pricing in the presence of inventory considerations: Research overview, current practices and future directions. Manage. Sci. 49 (10): 1287-1309.
16. Federgruen, A., A. Heching. 1999. Combined pricing and inventory control under uncertainty. Oper. Res. 47 (3): 454-475.
17. Feng, Y., F. Y. Chen. 2003 Joint pricing and inventory control with setup costs and demand uncertainty. Working paper, Chinese University of Hong Kong.
18. Feng, Y., F. Y. Chen. 2004 Optimality and optimization of a joint pricing and inventory-control policy for a periodicreview system. Working paper, Chinese University of Hong Kong.
19. Gallego, G., R. Phillips, O. Şahin. 2008. Strategic management of distressed inventory. Prod. Oper. Manag. 17 (4): 402-415.
20. Gayon, J. P., Y. Dallery. 2007. Dynamic vs static pricing in a make-tostock queue with partially controlled production. OR Spectrum 29 (2): 193-205.
21. Gayon, J. P., I. Talay-Deǧirmenci, F. Karaesmen, E. L Örmeci. 2009. Optimal pricing and production policies of a make-to-stock system with fluctuating demand. Probab. Eng. Inform. Sci. 23 (2): 205-230.
22. Huh, W. T., G. Janakiraman. 2008. (s, S) optimality in joint inventorypricing control: An alternate approach. Oper. Res. 56 (3): 783-790.
23. Karlin, S., H. Taylor. 1975. A First Course in Stochastic Processes. 2nd ed. Academic Press, New York.
24. Mangasarian, O. L. 1970. Convexity, pseudo-convexity and quasiconvexity of composite functions. Cahiers du Centre d'Études de Recherche Opérationnelle 12: 114-122.
25. Petruzzi, N. C., M. Dada. 1999. Pricing and the newsvendor problem: A review with extensions. Oper. Res. 47 (2): 183-194.
26. Polatoglu, H., I. Sahin. 2000. Optimal procurement policies under price-dependent demand. Int. J. Prod. Econ. 65 (2): 141-171.
27. Puterman, M. L. 1975. A diffusion process model for a storage system. Geisler, M. A. (ed.) Logistics. North-Holland Publishing Co., Amsterdam; American Elsevier Publishing Co., New York, 143-159.
28. Sulem, A. 1986. A solvable one-dimensional model of a diffusion inventory system. Math. Oper. Res. 11 (1): 125-133.
29. Vickson, R. G. 1986. A single product cycling problem under Brownian motion demand. Manage. Sci. 32 (10): 1336-1345.
30. Yano, C. A., S. M. Gilbert. 2003. Coordinated pricing and production/procurement decisions: A review. Chakravarty, A. K., J. Eliashberg (eds) Managing Business Interfaces: Marketing, Engineering and Manufacturing Perspectives. Kluwer Academic Publishers, Boston, MA, 65-104.
31. Yin, R., K. Rajaram. 2007. Joint pricing and inventory control with a Markovian demand model. Eur. J. Oper. Res. 182 (1): 113-126.
32. Zettelmeyer, F., F. S. Morton, J. Silva-Risso. 2006. Scarcity rents in car retailing: Evidence from inventory fluctuations at dealerships. NBER Working Paper No. 12177.