Mathematics of Operations Research
Mathematics of Operations Research
The structure of periodic review policies in the presence of random yield
Operations Research
Pricing and the News Vendor Problem: a Review with Extensions
Operations Research
Combined Pricing and Inventory Control Under Uncertainty
Operations Research
Impact of Uncertainty and Risk Aversion on Price and Order Quantity in the Newsvendor Problem
Manufacturing & Service Operations Management
Mathematics of Operations Research
A Newsvendor's Procurement Problem when Suppliers Are Unreliable
Manufacturing & Service Operations Management
(s, S) Optimality in Joint Inventory-Pricing Control: An Alternate Approach
Operations Research
Coordinating inventory control and pricing strategies: The continuous review model
Operations Research Letters
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This paper examines an integrated decision-making process regarding pricing for uncertain demand and sourcing from uncertain supply, which are often studied separately in the literature. Our analysis of the integrated system suggests that the base stock list price policy fails to achieve optimality even under deterministic demand. Instead, the optimal policy is characterized by two critical values: a reorder point and a target safety stock. Under this policy, a positive order is issued if and only if the inventory level is below the reorder point. When this happens, the optimal order and price are coordinated to achieve a constant target safety stock, which aims at hedging the demand uncertainty. We further investigate the profit improvement obtained from deploying dynamic pricing, as opposed to static pricing. Our results indicate that either supply limit or supply uncertainty may induce a significant benefit from dynamic pricing, and the compound effect of supply limit and uncertainty can be much more pronounced than the individual effects. Whether or not the supply capacity is limited has a major implication on the value of dynamic pricing. Under unlimited supply, dynamic pricing is more valuable when procurement cost is high or when demand is more sensitive to price. With limited supply, however, the capacity restriction tends to be relaxed, reducing the value of dynamic pricing.