Combined Pricing and Inventory Control with Multiple Unreliable Suppliers

20 Pages Posted: 28 Sep 2021 Last revised: 30 Aug 2022

See all articles by Awi Federgruen

Awi Federgruen

Columbia University - Columbia Business School, Decision Risk and Operations

Zhe Liu

Imperial College Business School

Jiaqi Lu

The Chinese University of Hong Kong, Shenzhen

Date Written: August 21, 2021

Abstract

We study a general finite horizon, periodic review combined inventory and pricing model with N suppliers and T periods, where both the demands and the supply mechanisms are random. The random supply mechanisms are of a general type that includes most structures encountered in practice. Demands are price dependent according to general, stochastic demand functions. We characterize the optimal combined pricing and ordering policies to all N suppliers. The general results pertain to general independent supply mechanisms. Under random capacities -- one of the special random supply mechanisms -- they also extend to suppliers that are positively dependent on each other.

Keywords: combined pricing and inventory control, general supply functions, multiple suppliers, individual threshold policies, monotone prices

Suggested Citation

Federgruen, Awi and Liu, Zhe and Lu, Jiaqi, Combined Pricing and Inventory Control with Multiple Unreliable Suppliers (August 21, 2021). Available at SSRN: https://ssrn.com/abstract=3931027 or http://dx.doi.org/10.2139/ssrn.3931027

Awi Federgruen

Columbia University - Columbia Business School, Decision Risk and Operations ( email )

New York, NY
United States

Zhe Liu (Contact Author)

Imperial College Business School ( email )

Imperial College London
South Kensington Campus
London, SW7 2AZ
United Kingdom

Jiaqi Lu

The Chinese University of Hong Kong, Shenzhen ( email )

HOME PAGE: http://https://www.sites.google.com/view/jiaqilu

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