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AbstractThis paper is concerned with the problem of simultaneously setting price and production levels for an exponentially decaying product. Such products suffer a loss in utility which is proportional to the total quantity of stock on hand. A continuous review, deterministic demand model is considered. The optimal ordering decision quantity is derived and its sensitivity to changes in perishability and product price is considered. The joint ordering pricing decision is also computed and consideration of parametric changes of these decisions indicates a non‐monotonic response for optimal price to changes in product decay. Issues of market entry and extensions to a model with shortages are also analyzed.

AbstractWe consider a periodic review model over a finite horizon for a perishable product with fixed lifetime equal to two review periods. The excess demand in a period is backlogged. The optimal replenishment and demand management (using price) decisions for such a product depend on the relative order of consumption of fresh and old units. We obtain insights on the structure of these decisions when the order of consumption is first‐in, first‐out and last‐in, first‐out. For the FIFO system, we also obtain bounds on both the optimal replenishment quantity as well as expected demand. We compare the FIFO system to two widely analyzed inventory systems that correspond to nonperishable and one‐period lifetime products to understand if demand management would modify our understanding of the relationship among the three systems. In a counterintuitive result, we find that it is more likely that bigger orders are placed in the FIFO system than for a nonperishable product when demand is managed. © 2013 Wiley Periodicals, Inc. Naval Research Logistics, 2013

AbstractThis article addresses a single‐item, finite‐horizon, periodic‐review coordinated decision model on pricing and inventory control with capacity constraints and fixed ordering cost. Demands in different periods are random and independent of each other, and their distributions depend on the price in the current period. Each period's stochastic demand function is the additive demand model. Pricing and ordering decisions are made at the beginning of each period, and all shortages are backlogged. The objective is to find an optimal policy that maximizes the total expected discounted profit. We show that the profit‐to‐go function is strongly CK‐concave, and the optimal policy has an (s,S,P) ‐like structure. © 2012 Wiley Periodicals, Inc. Naval Research Logistics, 2012

AbstractIn this paper, we present a continuous time optimal control model for studying a dynamic pricing and inventory control problem for a make‐to‐stock manufacturing system. We consider a multiproduct capacitated, dynamic setting. We introduce a demand‐based model where the demand is a linear function of the price, the inventory cost is linear, the production cost is an increasing strictly convex function of the production rate, and all coefficients are time‐dependent. A key part of the model is that no backorders are allowed. We introduce and study an algorithm that computes the optimal production and pricing policy as a function of the time on a finite time horizon, and discuss some insights. Our results illustrate the role of capacity and the effects of the dynamic nature of demand in the model. © 2007 Wiley Periodicals, Inc. Naval Research Logistics, 2007

A recent article by Bartels presents a theoretic discussion of the need for avoiding the fragmentation of marketing and distribution. What follows is a rationalisation and description of a practical approach to an associating of inventory carrying costs with the field sales organisation within marketing thus closing the loop between marketing and physical distribution. The integration of inventory control and marketing, a phase of bringing marketing and physical distribution together, can be viewed as a problem of overall management. Top corporate executives have in recent years stressed the importance of cash flow management to all levels of management, not merely financial managers. A frequently mentioned, obvious variable in improving cash flow is improved inventory control interpreted to mean reduced inventory levels to meet given service levels, thus releasing cash for other uses. To achieve this objective of improved inventory control, one needs to involve decision makers affecting the levels of inventory, specifically the field sales organisation.

ABSTRACTWe revisit the joint pricing, supplier selection, and inventory replenishment problem for a single item in a two‐stage system examined by Adeinat and Ventura (2015) and use the logit function to model the price‐sensitive demand. This article provides a detailed analysis regarding the shape and properties of the logit demand function. In this context, we propose a two‐stage piecewise‐linear approximation technique to solve the integrated pricing, supplier selection, and inventory replenishment model. Besides, in this research, we provide sufficient justification for the selection of the logit demand function as well as a comparison with other demand functions. A numerical study further suggests the importance of using a precise demand curve to select the set of suppliers, coordinate inventory, and accurately optimize the profit function.