Journal
M&SOM-MANUFACTURING & SERVICE OPERATIONS MANAGEMENT
Volume 11, Issue 3, Pages 538-542Publisher
INFORMS
DOI: 10.1287/msom.1080.0238
Keywords
perishable; pricing and inventory control
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In this note, we study the concurrent determination of pricing and inventory replenishment decisions for a perishable product in an infinite horizon. Demands in consecutive periods are independent and influenced by prices charged in each period. In particular, we treat price as a decision variable to maximize the total discounted profit. We analyze the optimal solution-structure of a two-period lifetime problem and from insights gained in numerical experiments, develop a base-stock/list-price heuristic policy for products with arbitrary fixed lifetimes. Experiments show this policy to be effective.
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