Generalizing the Announced Price Increase Problem*

In: Decision sciences, Band 24, Heft 4, S. 847-866

Abstract

ABSTRACTThis paper generalizes the announced price increase problem to consider a variety of practical concerns arising out of applications ranging from foreign exchange fluctuations to upper limits on the purchase of discounted supermarket items. These include limitations on the amount that can be purchased at the old price and/or on the length of the grace period, within which buyers may take advantage of this lower price. These constraints give rise to 16 possible situations. For each situation purchasing and inventory decision rules are developed. A numerical example is discussed to highlight the main features of the models.