Coordinated pricing and inventory decisions for perishable products

Onur Kaya () and Aylin Lelizar Polat ()
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Onur Kaya: Anadolu University
Aylin Lelizar Polat: Koç University

OR Spectrum: Quantitative Approaches in Management, 2017, vol. 39, issue 2, No 9, 589-606

Abstract: Abstract We investigate the problem of jointly determining the optimal pricing and inventory replenishment strategy for a deterministic perishable inventory system in which demand is time and price dependent. The inventory is also assumed to decay at a certain rate. The seller has the opportunity to adjust prices for a discrete number of times at a certain cost during the sales season to influence demand and to improve revenues. We develop a mathematical model to find the optimal times to change the prices, the optimal prices and the optimal order quantity. We present analytical results to find the optimal prices when the times of price changes are given and design heuristic algorithms to determine the optimal times to change the prices. We analyze the efficiency of multiple pricing strategy by comparing the profits obtained by single pricing case and also analyze the effect of different parameters on the optimal solution through numerical experiments.

Keywords: Pricing; Inventory; Perishable; Revenue management (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (7)

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DOI: 10.1007/s00291-016-0467-6

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