Joint Pricing and Inventory Management with Regular and Expedited Supplies under Reference Price Effects

10.6186/IJIMS.201906_30(2).0003

Yuan Li；Yu-Mei Hou

Dynamic programming ； pricing and inventory ； supply flexibility ； lead time ； reference price effects

International Journal of Information and Management Sciences

30卷2期（2019 / 06 / 01）

123 - 141

英文

Reference price effects, as an important factor affecting customers' purchase decision for a certain commodity, has an significant impact on the firms' pricing and inventory strategies. Therefore, how to determine an appropriate sales pricing and order flexibility strategy to maximize firms' profit is an essential task. A single-item, periodic-review finite horizon joint pricing and inventory system with regular and expedited supply sources under reference price effects is investigated, where demand in consecutive periods are independent as well as price and reference price sensitive random variables. The optimal pricing and ordering strategies, and the impact of reference price effects on these optimal decisions are studied. These results generalize those in Zhou and Chao (2014) in Production and Operations Management, Vol. 23, 65-80 to the reference price effects. Moreover, the operational impact of adding reference price effects is analyzed by comparing with their model. Finally, Numerical experiments characterize the qualitative properties of the optimal strategies and corresponding optimal profit values under reference price effects.

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1. Xiao-Hong Zhang(2021)。Optimal Dynamic Pricing Strategy for Inventory with Reference Price Effects。International Journal of Information and Management Sciences，32(1)，77-100。