Joint Optimal Pricing and Ordering Decisions for Seasonal Products with Weather-Sensitive Demand

Fu, Hongyong; Bin, Dan; Sun, Xiang-Kai

doi:10.1155/2014/105098

Cited by 8 publications

(8 citation statements)

References 26 publications

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“…With the application of a scaling parameter to the mean and standard deviation of the expected demand based on the product's selling price, the authors were able to construct a model used to maximize the prot function through a Poisson process. A more specic case where the expected demand for a seasonal product is highly sensitive to weather is observed by [Fu et al, 2014]. Assuming that the weather can be either "high" or "low", the product prices change accordingly and the retailer has to make decisions at the beginning of the period on the order quantity and seasonal retail prices.…”

Section: Inventory Controlmentioning

confidence: 99%

“…The models presented in our research utilize the newsvendor principles in determining optimal inventory levels; but where other researchers assume a correlation for future demand ( [Agrawal and Seshadri, 2000], [Fu et al, 2014], [Rabbani et al, 2016], [Jia and Hub, 2011]), we propose that demand be modeled as a stochastic process independent of external control similar to [Chou et al, 2007]. This approach is more practical and the uniqueness in exiblity of design and adjustment to industry needs, allow demand to be correlated with a dependent variable if necessary.…”

Section: Inventory Controlmentioning

confidence: 99%

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Optimal inventory policy through dual sourcing

2020

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We consider a risk-averse rm that utilizes dual-sourcing for perishable or seasonal goods with uncertain customer demand. Using real options theories, we provide two models aimed at determining optimal order quantities to maximize the rm's expected prot. Furthermore, we can consider the demand to be an observable process correlated to a traded, which can be hedged to reduce prot uncertainty. A single oshore single local order period (SOSLOP) model provides a pseudo-analytical solution which can be easily solved to determine an optimal oshore and local order quantities based on the manufacturers' lead times, and a more realistic single oshore multiple local order period (SOMLOP) model uses numerical methods to determine optimal order quantities. Finally, a method for matching distributions of expected demands based on managerial estimates can be applied to any of the aforementioned models and be easily incorporated into the industry.

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Section: Inventory Controlmentioning

confidence: 99%

Section: Inventory Controlmentioning

confidence: 99%

Optimal inventory policy through dual sourcing

2020

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“…Fu and Dan et al [10] present a joint decisions model in a newsvendor setting, where a retailer sells the seasonal products at the weather-dependent prices and provide a detailed analysis of the problems and characterizations of the optimal decisions when the retailer is risk-neutral. Wu and Zhang [11] study ordering and pricing problems for new repeat-purchase products and incorporate the repeat-purchase rate and price effects into the Bass model to characterize the demand pattern which considers two decision models: two-stage decision model and joint decision model.…”

Section: Introductionmentioning

confidence: 99%

Joint Decision on Ordering and Pricing of Cruise Tourism Supply Chain with Competing Newsboy-Type Retailers

Shi

Liu

2018

Mathematical Problems in Engineering

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Cruise industry has recorded rapid expansion during the last decades, and it has substantial contribution to local economies. In this paper, we introduce a cruise tourism supply chain system consisting of one supplier and two newsboy-type retailers. We investigate the optimal decisions in a decentralized system from a game theoretical perspective and find out the optimal ordering and pricing strategies of both retailers and the optimal wholesale prices of the supplier with the limited number of cruise tickets and try to find out how the total profits should be allocated by the two retailers in the alliance case. Our framework involves two operational strategies, including inconsistent wholesale prices in the benchmark case and consistent wholesale price in the alliance case in which the two retailers have a virtual alliance, combining to one retailer. A numerical example compares the performance of the supply chain members and the system in two cases and finds that it is better for the two retailers to have a virtual alliance, combining to one retailer when the total amount of cruise tickets ordered by the two retailers is constrained by the total number of cruise tickets for the supplier, but it is not good choice for the two retailers to combine to one retailer when the total number of cruise tickets for the supplier does not constrain the total amount of cruise tickets ordered by the two retailers. In addition, the performance of the system in the alliance case is as good as that in the benchmark case when the total amount of cruise tickets ordered by the two retailers is constrained by the total number of cruise tickets for the supplier. However, when the total number of cruise tickets for the supplier does not constrain the total amount of cruise tickets ordered by the two retailers, the performance of the system in the benchmark case is better than that in the alliance case.

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“…With rapid development of science and technology, more and more products become fashionable or seasonal goods with short sales cycle, low salvage value, and high demand uncertainty [1]. For instance, cut flowers, clothing, and even smartphones are all common products with fashionable or seasonal attributes, and inventory management of these products is crucial as well as complicated [2][3][4]. What is more, the vast of enterprises in the industry are small-and mediumsized enterprises (SMEs) often with shortage of liquid funds [5].…”

Section: Introductionmentioning

confidence: 99%

Optimal Ordering and Pricing Policies for Seasonal Products: Impacts of Demand Uncertainty and Capital Constraint

Shi

Fung

Guo

2016

Discrete Dynamics in Nature and Society

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With a stochastic price-dependent market demand, this paper investigates how demand uncertainty and capital constraint affect retailer's integrated ordering and pricing policies towards seasonal products. The retailer with capital constraint is normalized to be with zero capital endowment while it can be financed by an external bank. The problems are studied under a low and high demand uncertainty scenario, respectively. Results show that when demand uncertainty level is relatively low, the retailer faced with demand uncertainty always sets a lower price than the riskless one, while its order quantity may be smaller or larger than the riskless retailer's which depends on the level of market size. When adding a capital constraint, the retailer will strictly prefer a higher price but smaller quantity policy. However, in a high demand uncertainty scenario, the impacts are more intricate. The retailer faced with demand uncertainty will always order a larger quantity than the riskless one if demand uncertainty level is high enough (above a critical value), while the capital-constrained retailer is likely to set a lower price than the well-funded one when demand uncertainty level falls within a specific interval. Therefore, it can be further concluded that the impact of capital constraint on the retailer's pricing decision can be influenced by different demand uncertainty levels. Hindawi Publishing CorporationDiscrete Dynamics in Nature and Society decisions on ordering, pricing, and financing, which is not observed in existing literature. The main contributions and conclusions of this paper are as follows.(1) Studying Retailer's Integrated Decisions on Ordering, Pricing, and Financing. With introducing pricing decision into the "capital-constrained newsvendor" problem, this paper investigates the retailer's integrated ordering and pricing decisions in the presence of capital constraint. Results show that when market size is extremely small, the retailer will not borrow from the bank to order any quantity. Otherwise, it will borrow to order and its optimal order quantity and selling price can be uniquely determined.(2) Investigating the Impacts of Demand Uncertainty and Capital Constraint on Retailer's Optimal Ordering and Pricing Policies. Three models (i.e., the riskless model, uncertainty model, and uncertainty-underfunded model) are developed and in-depth comparisons of optimal solutions in three models are carried out to reveal how demand uncertainty and capital constraint affect retailer's integrated ordering and pricing policies. The problems are studied in a low and high demand uncertainty scenario, respectively, which is differentiated by an ingenious method, and plenty of conclusions are obtained through both theoretical analyses and numerical studies.The remainder of the paper is organized as follows. Section 2 presents the review of related literature. Section 3 describes the problem and provides the model notations and assumptions. Section 4 formulates three models and derives the optimal solutions. Sectio...

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Joint Optimal Pricing and Ordering Decisions for Seasonal Products with Weather-Sensitive Demand

Cited by 8 publications

References 26 publications

Optimal inventory policy through dual sourcing

Optimal inventory policy through dual sourcing

Joint Decision on Ordering and Pricing of Cruise Tourism Supply Chain with Competing Newsboy-Type Retailers

Optimal Ordering and Pricing Policies for Seasonal Products: Impacts of Demand Uncertainty and Capital Constraint

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