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| Author: | Jorgensen, S. Kort, P. M. |
| Title: | Optimal pricing and inventory policies: Centralized and decentralized decision making |
| Journal: | European Journal of Operational Research
2002 : MAY, VOL. 138:3, p. 578-600 |
| Index terms: | OPTIMIZATION PRICING INVENTORIES DECISION MAKING |
| Language: | eng |
| Abstract: | The paper studies an optimal control problem of pricing and inventory replenishment in a system with serial inventories. Consumer demand for a specific product at a retail outlet depends on price as well as the m-store stock of the product. The hypothesis is that for certain consumer products a large volume of displayed goods leads consumers to buy more than if the stock is small. In addition to the stock that is on display in the store there is an inventory of the product in a central warehouse. First the authors consider a setup in which management of the two stocks is decentralized such that pricing decisions are made by the store manager who also decides on the level of in- store inventory. The warehouse manager makes the replenishment decisions concerning the stock in the warehouse. |
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