The Newsboy Problem With Price-Dependent Demand Distribution

Lau, Amy Hing‐Ling; Lau, Hon‐Shiang

doi:10.1080/07408178808966166

Cited by 211 publications

(95 citation statements)

References 8 publications

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“…These effects are similar to the impact of demand variance in the traditional single-stage problem studied in the previous research of Lau and Lau (1988). The impact of d 1 on the optimal prices p s 1 and p s 2 is shown in Fig.…”

Section: Order Cancellation (Price-sensitive Demand Case)supporting

confidence: 78%

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Optimal ordering and pricing in a quick response system

Serel

2009

International Journal of Production Economics

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a b s t r a c tQuick response systems enable retailers to estimate customer demand more accurately, and improve stocking decisions for perishable products with uncertain demand. Retailers place separate orders for a product at two different times before the selling season. Following the initial order, additional market information is obtained, and the second-order amount is decided based on an improved demand forecast. In some cases, purchase cost associated with the second order is uncertain, and demand for the product during the season depends on the selling price. We present a solution procedure for finding the optimal order quantity and selling price in this setting. We also study the case where any desired portion of the initial order can be cancelled after updating the demand forecast. In the numerical study, the optimal price is observed to be relatively insensitive to changes in demand variability.

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Section: Order Cancellation (Price-sensitive Demand Case)supporting

confidence: 78%

“…The extension of the standard newsvendor problem to the case where demand is negatively related to the selling price has received considerable interest from researchers in the operations management field (e.g. Lau and Lau, 1988). For a recent review of the literature, see Petruzzi and Dada (1999).…”

Section: Optimal Policy Under Price-dependent Demandmentioning

confidence: 99%

Optimal ordering and pricing in a quick response system

Serel

2009

International Journal of Production Economics

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“…Lau and Lau [32] examined the pricing and ordering policies of a newsvendor facing with a random price-dependent demand under two different objectives, (1) the objective of maximizing the expected profit, and (2) the objective of maximizing the probability of achieving a certain profit level. Two price-demand forms are considered in this paper, an additive form as assumed in our analysis above with a homoscedastic and normally distributed random term (model A), and a relationship fitted with a four-parameter beta distribution based on subjective estimates (model B).…”

Section: Demand and Market Pricementioning

confidence: 99%

The newsvendor problem: Review and directions for future research

Qin

Wang

Vakharia

et al. 2011

European Journal of Operational Research

414

173

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In this paper, we review the contributions to date for analyzing the newsvendor problem.Our focus is on examining the specific extensions for analyzing this problem in the context of modeling customer demand, supplier costs, and the buyer risk profile. More specifically, we analyze the impact of market price, marketing effort, and stocking quantity on customer demand; how supplier prices can serve as a coordination mechanism in a supply chain setting; integrating alternative supplier pricing policies within the newsvendor framework; and how the buyer's risk profile moderates the newsvendor order quantity decision. For each of these areas, we summarize the current literature and develop extensions. Finally, we also propose directions for future research.

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“…[12], [19], [22], [40], [44] address the optimal inventory and pricing policy of a monopolist seller who changes prices periodically over time. There are many other papers that discuss issues of dynamic pricing with inventory considerations.…”

Section: A Dynamic Pricing Of Traditional Retail Marketsmentioning

confidence: 99%

Learning dynamic prices in MultiSeller electronic retail markets with price sensitive customers, stochastic demands, and inventory replenishments

Chinthalapati

Narahari

Karumanchi

2006

IEEE Trans. Syst., Man, Cybern. C

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Abstract-In this paper, we use reinforcement learning (RL) as a tool to study price dynamics in an electronic retail market consisting of two competing sellers, and price sensitive and lead time sensitive customers. Sellers, offering identical products, compete on price to satisfy stochastically arriving demands (customers), and follow standard inventory control and replenishment policies to manage their inventories. In such a generalized setting, RL techniques have not previously been applied. We consider two representative cases: 1) no information case, were none of the sellers has any information about customer queue levels, inventory levels, or prices at the competitors; and 2) partial information case, where every seller has information about the customer queue levels and inventory levels of the competitors. Sellers employ automated pricing agents, or pricebots, which use RL-based pricing algorithms to reset the prices at random intervals based on factors such as number of back orders, inventory levels, and replenishment lead times, with the objective of maximizing discounted cumulative profit. In the no information case, we show that a seller who uses Q-learning outperforms a seller who uses derivative following (DF). In the partial information case, we model the problem as a Markovian game and use actor-critic based RL to learn dynamic prices. We believe our approach to solving these problems is a new and promising way of setting dynamic prices in multiseller environments with stochastic demands, price sensitive customers, and inventory replenishments.Index Terms-Dynamic pricing, inventory replenishments, markovian game, multi-agent learning, online retail markets, price sensitive customers, reinforcement learning (RL), stochastic demands.

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The Newsboy Problem With Price-Dependent Demand Distribution

Cited by 211 publications

References 8 publications

Optimal ordering and pricing in a quick response system

Optimal ordering and pricing in a quick response system

The newsvendor problem: Review and directions for future research

Learning dynamic prices in MultiSeller electronic retail markets with price sensitive customers, stochastic demands, and inventory replenishments

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