Market selection decisions for inventory models with price-sensitive demand

BAKAL İ. S., Geunes J., Romeijn H. E.

JOURNAL OF GLOBAL OPTIMIZATION, cilt.41, sa.4, ss.633-657, 2008 (SCI-Expanded) identifier identifier

  • Yayın Türü: Makale / Tam Makale
  • Cilt numarası: 41 Sayı: 4
  • Basım Tarihi: 2008
  • Doi Numarası: 10.1007/s10898-007-9269-3
  • Dergi Adı: JOURNAL OF GLOBAL OPTIMIZATION
  • Derginin Tarandığı İndeksler: Science Citation Index Expanded (SCI-EXPANDED), Scopus
  • Sayfa Sayıları: ss.633-657
  • Anahtar Kelimeler: economic order quantity, newsvendor problem, market selection, pricing, MULTILOCATION NEWSBOY PROBLEM, EXPECTED COSTS, NEWSVENDOR PROBLEM, CENTRALIZATION, DISCRIMINATION, FLEXIBILITY, PROFITS, WELFARE, SYSTEM, OUTPUT
  • Orta Doğu Teknik Üniversitesi Adresli: Evet

Özet

In the majority of classical inventory theory literature, demand arises from exogenous sources upon which the firm has little or no control. In many practical contexts, however, aggregate demand is comprised of individual demands from a number of distinct customers or markets. This introduces new dimensions to supply chain planning problems involving the selection of markets or customers to include in the demand portfolio. We present a nonlinear, combinatorial optimization model to address planning decisions in both deterministic and stochastic settings, where a firm constructs a demand portfolio from a set of potential markets having price-sensitive demands. We first consider a pricing strategy that dictates a single price throughout all markets and provide an efficient algorithm for maximizing total profit. We also analyze the model under a market-specific pricing policy and describe its optimal solution. An extensive computational study characterizes the effects of key system parameters on the optimal value of expected profit, and provides some interesting insights on how a given market's characteristics can affect optimal pricing decisions in other markets.