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Published in:
2013 | OriginalPaper | Chapter
45. Research on Dynamic Pricing Based on Rationing for Two Deterministic Demand Classes
Author : Yongsheng Cheng
Published in: Informatics and Management Science IV
Publisher: Springer London
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Abstract
It is discussed dynamic price discounts integrated with rationing policy for two demand classes in a deterministic environment. The two classes are partial backlogging of unfilled demand, which differ based on their sense to discounts and their willingness to incur delay in fulfilment of their demands. The firm either fills demand or offers a linear price discount to induce the demand to wait for fulfillment from the next reorder. Rationing strategy is carried out with offering discount for encouraging backlog. After analyzing the income and costs of the integrated-strategy, a serial equation for optimality is presented. Due to the cumbersome algorithm of the equation, several inherit rules are proposed to simplify calculation. Then the results are compared to EOQ policy, to a policy that only rations inventory without dynamic discounting and to a policy that only provides discounts. Finally numerical test proves the effectiveness of integration policy.