Author
Akan, M., Albey, Erinç, Güler, M. G.
Publication Date
2021-04
Publication Place
-
Elsevier
Subject
Pricing, Inventory management, Optimal control, Time-dependent interest rate, Fashion products
Type
Periodical
Language
English
Digital
Yes
Manuscript
No
Library
Özyeğin University
Library Asset ID
0360-8352
Record ID
44f1b429-2ef9-4499-b8d6-297b7ff43238
Library Location
Industrial Engineering
Date
2021-04
Sample Text
In this work we consider the dynamic pricing problem of a retailer operating in a market with a single fashion item and under time-dependent interest rate. The demand is assumed to be deterministic and dependent on the price and decay with time, i.e., the market shrinks throughout the horizon. Using an optimal-control-theoretic approach, we analytically derive the optimal pricing and inventory strategy for the retailer over a finite horizon setting. We further analyze the ramifications of the optimal pricing decision for different initial inventory levels dictated by the relationship between the supplier and the retailer; and for varying market interest rates. Optimal dynamic pricing policy is a continuous function, which is almost impossible to use in practice. This is handled using approximate piece-wise constant pricing policies. The trade-off between dynamic pricing policy and approximate policies is also investigated.
DOI
10.1016/j.cie.2021.107149
Cilt
154
