Dynamic Pricing Under Economic Ordering and Strategic Customers with Forward Buying and Postponement

Research output: Chapter in Book/Report/Conference proceedingChapterpeer-review

1 Scopus citations

Abstract

Dynamic pricing is an instrument to achieve operational efficiency in inventory management. We consider an economic ordering context with strategic customers who forward-buy or postpone their purchases in anticipation of price changes. By charging a lower price when inventories are high, significant profit improvements can be achieved. The paper analyzes a simple EOQ-type model with a single price change within each inventory cycle. Numerical examples illustrate its impact on profits, order cycle duration and optimal price discounts. In particular for slow moving and low margin products, improvements in retail-type environments are substantial.

Original languageEnglish
Title of host publicationDynamic Modeling and Econometrics in Economics and Finance
PublisherSpringer Science and Business Media Deutschland GmbH
Pages301-311
Number of pages11
DOIs
StatePublished - 2016

Publication series

NameDynamic Modeling and Econometrics in Economics and Finance
Volume22
ISSN (Print)1566-0419
ISSN (Electronic)2363-8370

Keywords

  • Dynamic Price
  • Economic Order Quantity
  • Economic Order Quantity Model
  • Order Cycle
  • Price Discount

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