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Joint Pricing and Inventory Control under Reference Price Effects

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Book Series: Forschungsergebnisse der Wirtschaftsuniversitaet Wien ISBN: 9783631589137 Year: Pages: 124 DOI: 10.3726/b13901 Language: English
Publisher: Peter Lang International Academic Publishing Group
Subject: Business and Management
Added to DOAB on : 2019-01-15 13:32:26
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Abstract

In this work, we address the problem of simultaneously determining a pricing and inventory replenishment strategy under reference price effects. This reference price effect models the fact that consumers not only react sensitively to the current price, but also to deviations from a reference price formed on the basis of past purchases. Immediate effects of price reductions on profits have to be weighted against the resulting losses in future periods. By providing an analytical analysis and numerical simulations we study how the additional dynamics of the consumers’ willingness to pay affect an optimal pricing and inventory control model and whether a simple policy such as a base-stock-list-price policy holds in such a setting.

Single Period Inventory Control and Pricing

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Book Series: Forschungsergebnisse der Wirtschaftsuniversitaet Wien ISBN: 9783631612224 Year: Pages: 116 DOI: 10.3726/b13914 Language: English
Publisher: Peter Lang International Academic Publishing Group
Subject: Economics
Added to DOAB on : 2019-01-15 13:32:25
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Abstract

The price-setting newsvendor model is used to address the single period joint pricing and inventory control problem. The objective is to set the optimal price and replenishment quantity of a single product in order to maximize the expected profit. Products with a short selling season and relatively long replenishment lead times such as fashion goods are the most relevant application areas of the model. The focus of the work is the generalization of the model with respect to the modeling of uncertainty in demand. The author presents an analytical and empirical study which compares different demand models with a more flexible model based on price and inventory optimization. She concludes that using a general model can increase the profits significantly.

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2018 (2)