Zero Ending Inventory Dynamic Pricing Model Under Stochastic Demand, Fixed Lifetime Product, And Fixed Order Quantity

Anna V. Kitaeva,Natalia V. Stepanova,Alexandra O. Zhukovskaya

IFAC PAPERSONLINE（2019）

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Abstract

We consider a perishable product with a fixed shelf life under fixed-order quantity policy. The demand is a compound Poisson process with a price sensitive intensity and a continuous batch size distribution. A model of retail price control is proposed allowing us to sell a lot without leftovers almost surely during the product's lifetime. A diffusion approximation of the demand process is used to find the probabilistic characteristics of the selling process and the expected revenue. (C) 2019, IFAC (International Federation of Automatic Control) Hosting by Elsevier Ltd. All rights reserved.

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Key words

Dynamic Pricing, Zero Ending Inventory, Price Sensitive Demand, Compound Poisson Demand, Diffusion Process, Fixed Order Quantity, Expected Revenue

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