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Joint inventory and pricing control with lagged price responses

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  • Li, Yang
  • Liu, Feng

Abstract

This paper studies the single stage, multiple period joint inventory and pricing planning problem with lagged price response. We prove that the optimal joint inventory and pricing policy takes the form of a state dependent list price base stock policy for the additive linear demand function with a first order auto-regressive distributed lag. Both the base stock level and the list price decisions are determined as functions of the effective price, which captures the current and past pricing impacts. Numerical studies are conducted to examine the impact of the lagged price response on the optimal decisions and the total profit.

Suggested Citation

  • Li, Yang & Liu, Feng, 2021. "Joint inventory and pricing control with lagged price responses," International Journal of Production Economics, Elsevier, vol. 241(C).
    • Handle: RePEc:eee:proeco:v:241:y:2021:i:c:s0925527321002292
    DOI: 10.1016/j.ijpe.2021.108253
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