Note—Pricing and Inventory Control for a Perishable Product
Yanzhi Li, Andrew Lim, Brian Rodrigues
Manufacturing & Service Operations Management · 2009 · Volume 11 · Issue 3
Abstract
In this note, we study the concurrent determination of pricing and inventory replenishment decisions for a perishable product in an infinite horizon. Demands in consecutive periods are independent and influenced by prices charged in each period. In particular, we treat price as a decision variable to maximize the total discounted profit. We analyze the optimal solution-structure of a two-period lifetime problem and from insights gained in numerical experiments, develop a base-stock/list-price heuristic policy for products with arbitrary fixed lifetimes. Experiments show this policy to be effective.
Keywords
perishable, pricing and inventory control
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