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

In: Dynamic Perspectives on Managerial Decision Making

Author

Listed:
  • Stefan Minner

    (Technische Universität München)

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.

Suggested Citation

  • Stefan Minner, 2016. "Dynamic Pricing Under Economic Ordering and Strategic Customers with Forward Buying and Postponement," Dynamic Modeling and Econometrics in Economics and Finance, in: Herbert Dawid & Karl F. Doerner & Gustav Feichtinger & Peter M. Kort & Andrea Seidl (ed.), Dynamic Perspectives on Managerial Decision Making, pages 301-311, Springer.
    • Handle: RePEc:spr:dymchp:978-3-319-39120-5_17
    DOI: 10.1007/978-3-319-39120-5_17
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    Cited by:

    1. Xu, Xiaoyan & Choi, Tsan-Ming & Chung, Sai-Ho & Guo, Shu, 2023. "Collaborative-commerce in supply chains: A review and classification of analytical models," International Journal of Production Economics, Elsevier, vol. 263(C).

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