scholarly journals Dynamic Pricing Policy Using Preservation Technology with Stock and Price Sensitive Demand

2020 ◽  
Vol 26 (3) ◽  
pp. 266-274
Author(s):  
Uttam Kumar Khedlekar ◽  
Priyanka Singh ◽  
Neelesh Gupta
Keyword(s):  
Dynamic Pricing ◽  
Policy Decision ◽  
Pricing Strategy ◽  
Selling Price ◽  
Market Demand ◽  
Pricing Policy ◽  
Preservation Technology ◽  
Proposed Model ◽  
Stock Policy ◽  
Dependent Demand

This paper aims to develop a dynamic pricing policy for deteriorating items with price and stock dependent demand. In declining market demand of items decreases with respect to time and also after a duration items get outdated. In this situation it needs a pricing policy to sale the items before end season. The proposed dynamic pricing policy is applicable for a limited period to clease the stock. Policy decision regarding the selling price could aggressively attracts the costumers. Objectives are to maximize the prot/revenue, pricing strategy and economic order level for such a stock dependent and price sensitive items. We are giving numerical example and simulation to illustrate the proposed model.

scholarly journals Dynamic Pricing in a Multi-Period Newsvendor Under Stochastic Price-Dependent Demand

Mathematics ◽  
2019 ◽  
Vol 7 (6) ◽  
pp. 520 ◽  
Author(s):  
Mehran Ullah ◽  
Irfanullah Khan ◽  
Biswajit Sarkar
Keyword(s):  
Dynamic Pricing ◽  
Demand Uncertainty ◽  
New Technologies ◽  
Rapid Development ◽  
Life Cycles ◽  
Selling Price ◽  
Market Demand ◽  
Newsvendor Model ◽  
Pricing Policy ◽  
Dependent Demand

The faster growth of technology stipulates the rapid development of new products; with the spread of new technologies old ones are outdated and their market demand declines sharply. The combined impact of demand uncertainty and short life-cycles complicate ordering and pricing decision of retailers that leads to a decrease in the profit. This study deals with the joint inventory and dynamic pricing policy for such products considering stochastic price-dependent demand. The aim is to develop a discount policy that enables the retailer to order more at the start of the selling season thus increase the profit and market share of the retailer. A multi-period newsvendor model is developed under the distribution-free approach and the optimal stocking quantities, unit selling price, and the discount percentage are obtained. The results show that the proposed discount policy increases the expected profit of the system. Additionally, the stocking quantity and the unit selling price also increases in the proposed discount policy. The robustness of the proposed model is illustrated with numerical examples and sensitivity analysis. Managerial insights are given to extract significant insights for the newsvendor model with discount policy.

scholarly journals Optimal Pricing Decision of Fashion Apparel considering Experiential Service and Design Enhancement

Complexity ◽  
2020 ◽  
Vol 2020 ◽  
pp. 1-11 ◽  
Author(s):  
Qi Xu ◽  
Lili Zhou ◽  
Qi Chen
Keyword(s):  
Substitution Effects ◽  
Optimal Pricing ◽  
Selling Price ◽  
Market Demand ◽  
Complementarity Effect ◽  
Deterioration Rate ◽  
Pricing Decision ◽  
Proposed Model ◽  
Total Profit ◽  
Fashion Apparel

Fashionable clothing is susceptible to seasonality, fashion popularity, and other factors. The decline in the fashion level for fashion apparel will cause its market value to continuously decrease, reducing market demand and creating a backlog of apparel inventory. Under such a circumstance, the apparel retailer chooses to maintain the fashion of the goods by providing experiential services or enhancing product design capabilities. This paper focuses on the discussions on the issue of whether experience service and design efforts are complements or substitutes. The major objective is to simultaneously determine the experience service investment and the optimal selling price to maximize the total profit. First, a Cobb–Douglas utility function is used to derive a demand function that depends on the price and fashion level. Four kinds of inventory models are further established to obtain optimal pricing and inventory ordering strategies. Second, an algorithm is presented to search for the optimal solutions of the proposed model. Finally, a numerical example is provided to perform a sensitivity analysis of the key parameters and to discuss specific managerial insights. The numerical examples show that both the experiential services and the enhanced fashion design can effectively reduce the apparel company’s inventory and increase profits. When the two strategies are combined, they will produce complementary or substitution effects, which depend on the deterioration rate of the fashion level of the apparel. If the deterioration rate is less than a critical value, the interaction of experiential services and design investment has a complementarity effect.

scholarly journals Optimal replenishment policy for items with three-parameter Weibull deterioration, stock-level dependent demand and partial backlogging

2018 ◽  
Vol 28 (1) ◽  
pp. 107-121 ◽  
Author(s):  
Smaila Sanni ◽  
Polycarp Chigbu
Keyword(s):  
Inventory Level ◽  
Market Demand ◽  
Partial Backlogging ◽  
Proposed Model ◽  
Perform Sensitivity Analysis ◽  
Replenishment Policy ◽  
Managerial Implications ◽  
Real Market ◽  
The Impact ◽  
Dependent Demand

Our focus in this paper is on determining an optimal replenishment policy for items with three-parameter Weibull distribution deterioration and inventory-level dependent demand. We developed and analyzed the model under the assumption of partial backlogging. The three-parameter Weibull hazard rate captures the impact of already deteriorated items that are received into the inventory, as well as those items that may start deteriorating in future. The inventory-level demand reflects a real market demand for product whose sales is enhanced by stock on display. We study a case base examples to gain some quantitative insight into the proposed model and we perform sensitivity analysis to draw some managerial implications.

Optimal pricing model for non-instantaneous deterioration items with price and freshness sensitive demand under the e-commerce environment in China

Kybernetes ◽  
2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Weihua Xu ◽  
Ketong Zhao ◽  
Yixuan Shi ◽  
Sun Bingzhen
Keyword(s):  
Dynamic Pricing ◽  
Decision Problems ◽  
Theoretical Research ◽  
Pricing Strategy ◽  
Optimal Pricing ◽  
Managerial Decision ◽  
Pricing Policy ◽  
Content Type ◽  
Demand Rate ◽  
Total Profit

Purpose The purpose of this paper is to focus on determining the optimal sales price for non-instantaneous deterioration items according to consideration of freshness and demand. Design/methodology/approach In this model, the authors have described the demand function which is dependent on price as well time. The products that the deterioration is considered as non-instantaneous have a determinate shelf life, and their demand rate will decrease over time after the beginning of the selling period. This paper depicts that the total profit of non-instantaneous deterioration items using the dynamic pricing strategy is higher than that using fixed pricing strategy. Findings Finally, to illustrate and validate the model, the authors have used some numerical examples. A new freshness function and the model to study pricing policy are developed as well applied to solve managerial decision problems. Originality/value This paper complements the lack of the existing theoretical research of pricing for non-instantaneous deterioration items under an e-commerce environment. A new freshness function and the model to study pricing policy are developed as well applied to solve managerial decision problems.

Vendor-Buyer Supply Chain Models With Supplier Default Risk Under Selling Price and Trade Credit Period Dependent Demand

2018 ◽  
pp. 156-173
Author(s):  
Chetansinh R. Vaghela ◽  
Nita H. Shah
Keyword(s):  
Supply Chain ◽  
Default Risk ◽  
Trade Credit ◽  
Stackelberg Game ◽  
Model Parameters ◽  
Selling Price ◽  
Lot Size ◽  
Credit Period ◽  
Proposed Model ◽  
Dependent Demand

This chapter focuses on uncooperative supply chain inventory models when a supplier offers a credit period to the retailer for a fixed period of time. The models are studied with trade credit in Nash game and Supplier-Stackelberg game respectively. First, the authors have presented optimal results for centralized and decentralized decisions with selling price dependent demand and without trade credit. Second, the authors have obtained optimal results under the two games using classical optimization. The total joint profit of the supply chain is maximized with respect to initial lot size, selling price, and trade credit period. Numerical examples are provided to authenticate the proposed model and to provide some managerial insights. Also through sensitivity analysis, important model parameters are examined.

Optimal dynamic pricing, preservation technology investment and periodic ordering policies for agricultural products

2019 ◽  
Vol 53 (3) ◽  
pp. 731-747 ◽  
Author(s):  
Jing Lu ◽  
Jianxiong Zhang ◽  
Xinyun Jia ◽  
Guowei Zhu
Keyword(s):  
Inventory Management ◽  
Dynamic Pricing ◽  
Optimal Strategies ◽  
Solution Procedure ◽  
Agricultural Products ◽  
Pricing Policy ◽  
Technology Investment ◽  
Deterioration Rate ◽  
Preservation Technology ◽  
Preservation Technology Investment

This paper focuses on the inventory management of agricultural products, a specific type of perishable items carrying the deterioration property. In practice, the deterioration rate of agricultural products is varying with time and can be slowed downviainvesting in the preservation technology. This objective of this paper is to maximize the firm’s total profit per unit time by simultaneously determining dynamic pricing, replenishment cycle length, replenishment quantity and preservation technology investment. We first derive pricing policy by solving a dynamic optimization problem and then propose a solution procedure to obtain the optimal strategies that maximize profit. Furthermore, numerical examples and sensitivity analysis are conducted to gain more managerial insights. We find that the firm should take a penetration pricing policy. In addition, if the shelf life of products is very long, the firm should not take preservation technology investment. When the unit holding cost is relatively small or the unit purchasing cost is relatively large, the firm should increase preservation technology investment.

scholarly journals A Price-Dependent Demand Model in the Single Period Inventory System with Price Adjustment

2013 ◽  
Vol 2013 ◽  
pp. 1-9 ◽  
Author(s):  
Kamran Forghani ◽  
Abolfazl Mirzazadeh ◽  
Mehdi Rafiee
Keyword(s):  
Optimal Order ◽  
Selling Price ◽  
Inventory Problem ◽  
Demand Model ◽  
Inventory Costs ◽  
Single Period ◽  
Proposed Model ◽  
Demand Rate ◽  
Total Inventory ◽  
Dependent Demand

The previous efforts toward single period inventory problem with price-dependent demand only investigate the optimal order quantity to minimize the total inventory costs; however, there is no method in the literature to avoid unwanted costs due to the deviation between the actual demand and the previously estimated demand. To fill this gap, the present paper supposes that stochastic demand rate with normal distribution is sensitive to the selling price; this means that increasing the selling price would decrease the demand rate and vice versa. After monitoring the consumption trend within a section of the period, a new selling price is implemented to change the demand rate and reduce the shortage or salvage costs at the end of the period. Three functions were suggested to represent the demand rate as a function of selling price, and the numerical analysis was implemented to solve the proposed problem. Finally, an illustrative numerical example was solved for different configurations in order to show the advantages of the proposed model. The results revealed that there is a significant improvement in the system costs when price revision is considered.

Optimal Selling Price and Order Size for Non-Instantaneous Deteriorating Items With Generalized Price and Time-Dependent Demand and Partial Backlogging

2018 ◽  
pp. 58-73
Author(s):  
Hardik N. Soni ◽  
Ashaba Devrajsinh Chauhan
Keyword(s):  
Waiting Time ◽  
General Framework ◽  
Lot Sizing ◽  
Time Dependent ◽  
Selling Price ◽  
Partial Backlogging ◽  
Lot Size ◽  
Proposed Model ◽  
Lot Sizing Problem ◽  
Dependent Demand

The problem of determining the optimal selling price and lot size for an inventory system with non-instantaneous deteriorating item is considered in this chapter. In order to provide general framework, the pricing and lot sizing problem is modeled assuming a general price and time dependent demand function. The model allows for backlogging of demand which is characterized by decreasing function of waiting time. As the problem involves revenue and costs, a natural objective function for the model is profit per period. First, the sub problem in which price is fixed is solved to determine the optimal inventory policy. To broaden the problem, a procedure is developed for obtaining the optimal selling price and order size. To investigate the characteristics of the proposed model, numerical illustrations are presented.

SIMULATION OF INVENTORY POLICY FOR PRODUCT WITH PRICE AND TIME-DEPENDENT DEMAND FOR DETERIORATING ITEM

2012 ◽  
Vol 03 (01) ◽  
pp. 1150001 ◽  
Author(s):  
D. SHUKLA ◽  
U. K. KHEDLEKAR ◽  
R. P. S. CHANDEL ◽  
S. BHAGWAT
Keyword(s):  
Inventory Management ◽  
Dynamic Pricing ◽  
Optimal Number ◽  
Pricing Policy ◽  
Data Set ◽  
Maximum Profit ◽  
Net Profit ◽  
Recurrence Method ◽  
Theoretical Results ◽  
Dependent Demand

In a declining market for goods, we optimize the net profit in business when inventory management allows change in the selling prices n times over time horizon. We are computing optimal number of changes in prices, respective optimal prices, and optimal profit in each of the cycle for a deteriorating product. This paper theoretically proves that for any business setup there exists an optimal number of price settings for obtaining maximum profit. Theoretical results are supported by numerical examples for different setups (data set) and it is found that for every setup the dynamic pricing policy outperforms the static pricing policy. In our model, the deterioration factor has been taken into consideration. The deteriorated units are determined by the recurrence method. Also we studied the effect of different parameters on optimal policy with simulation. For managerial purposes, we have provided some "suggested intervals" for choosing parameters depending upon initial demand, which help to predict the best prices and arrival of customers (demand).

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