Tansu Barker and Martin L. Gimpl
Strategy is examined, using newness of products, markets and technology as the variables. An understanding of newness with reference to the concept of continuous vs. discontinuous…
Abstract
Strategy is examined, using newness of products, markets and technology as the variables. An understanding of newness with reference to the concept of continuous vs. discontinuous innovation along these three dimensions could facilitate evaluation of market and profit potential and the risk factor. Furthermore, this classification system may suggest new business opportunities by indicating gaps in the market and pointing out the critical factor(s) associated with those gaps.
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Nagihan Çomez and Timothy Kiessling
The purpose of this paper is to study joint inventory and pricing strategy for a continuous inventory review system. While dynamic pricing decisions are often studied in the…
Abstract
Purpose
The purpose of this paper is to study joint inventory and pricing strategy for a continuous inventory review system. While dynamic pricing decisions are often studied in the literature along with inventory management, the authors' aim in this study is to obtain a single long‐run optimal price; also to gain insight about how to obtain the optimal price and inventory control variables simultaneously and then the benefits of joint optimization of the inventory and pricing decisions over the sequential optimization policy often followed in practice.
Design/methodology/approach
A general (R;Q) policy system with fixed cost of ordering is modelled and then the case where unsatisfied demand is lost is studied. General forms of both the additive and multiplicative demand models are used to obtain structural results.
Findings
By showing optimality conditions on the price and inventory decision variables, two algorithms on how to obtain optimal decision variables, one for additive and another for multiplicative demand‐price model are provided. Through extensive numerical analyses, the potential profit increases are reported if the price and inventory problem are solved simultaneously instead of sequentially. In addition, the sensitivities of optimal decision variables to system parameters are revealed.
Practical implications
Although there are several studies in the literature investigating emergency price change models, they use arbitrary exogenous prices menus. However, the value of a price change can be better appreciated if the long‐run price is optimal for the system.
Originality/value
Very few researchers have investigated constant price and inventory optimization, and while there are several past studies demonstrating the benefits of dynamic pricing over a static one, there still are not many findings on the benefit of joint price and inventory optimization.