Pricing and the News Vendor Problem: a Review with Extensions
TLDR
This paper provides a comprehensive review that synthesizes existing results for the single period problem and develops additional results to enrich the existing knowledge base, and reviews and develops insight into a dynamic inventory extension of this problem.Abstract:
In the newsvendor problem, a decision maker facing random demand for a perishable product decides how much of it to stock for a single selling period. This simple problem with its intuitively appealing solution is a crucial building block of stochastic inventory theory, which comprises a vast literature focusing on operational efficiency. Typically in this literature, market parameters such as demand and selling price are exogenous. However, incorporating these factors into the mode l can provide an excellent vehicle for examining how operational problems interact with marketing issues to influence decision making at the firm level. In this paper we examine an extension of the newsvendor problem in which stocking quantity and selling price are set simultaneously. We provide a comprehensive review that synthesizes existing results for the single period problem and develop additional results to enrich the existing knowledge base. We also review and develop insight into a dynamic inventory extension of this problem, and motivate the applicability of such models.read more
Citations
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Book ChapterDOI
Supply Chain Coordination with Contracts
TL;DR: This chapter extends the newsvendor model by allowing the retailer to choose the retail price in addition to the stocking quantity, and discusses an infinite horizon stochastic demand model in which the retailer receives replenishments from a supplier after a constant lead time.
Journal ArticleDOI
Supply Chain Coordination with Revenue-Sharing Contracts: Strengths and Limitations
TL;DR: Several limitations of revenue sharing are identified to (at least partially) explain why it is not prevalent in all industries, including cases in which revenue sharing provides only a small improvement over the administratively cheaper wholesale price contract.
Journal ArticleDOI
Perspectives in supply chain risk management
TL;DR: In this paper, the authors present a review of various quantitative models for managing supply chain risks and relate various supply chain risk management strategies examined in the research literature with actual practices, highlighting the gap between theory and practice, and motivate researchers to develop new models for mitigating supply chain disruptions.
Journal ArticleDOI
Closed-Loop Supply Chain Models with Product Remanufacturing
TL;DR: This paper addresses the problem of choosing the appropriate reverse channel structure for the collection of used products from customers and shows that simple coordination mechanisms can be designed such that the collection effort of the retailer and the supply chain profits are attained at the same level as in a centrally coordinated system.
Journal ArticleDOI
Reverse Channel Design: The Case of Competing Retailers
TL;DR: This paper examines how the allocation of product collection to retailers impacts their strategic behavior in the product market, and discusses the economic trade-offs the manufacturer faces while choosing an optimal reverse channel structure.
References
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Statistical Theory of Reliability and Life Testing Probability Models
Book
Statistical Theory of Reliability and Life Testing: Probability Models
Richard E. Barlow,Frank Proschan +1 more
TL;DR: A number of new classes of life distributions arising naturally in reliability models are treated systematically and each provides a realistic probabilistic description of a physical property occurring in the reliability context, thus permitting more realistic modeling of commonly occurring reliability situations.
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Decision Systems for Inventory Management and Production Planning
TL;DR: In this article, an in-depth discussion of the major decisions in production planning, scheduling, and inventory management faced by organizations, both private and public, is presented, as well as the latest systems used to make decisions, including Just-in-Time Manufacturing, KANBAN, Distribution Requirements Planning and PUSH Control.
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Optimal dynamic pricing of inventories with stochastic demand over finite horizons
TL;DR: In this paper, the authors investigate the problem of dynamically pricing such inventories when demand is price sensitive and stochastic and the firm's objective is to maximize expected revenues, and obtain structural monotonicity results for the optimal intensity resp, price as a function of the stock level and the length of the horizon.
Journal ArticleDOI
Inventory Control and Price Theory
TL;DR: In spite of the high level of interest in inventory control that has sprung up recently among statisticians, economists, and businessmen, very little has been written that indicates the fundamental connection between price theory and inventory control.