Joint pricing-production decisions with stochastic price-dependent demand

Research output: Chapters, Conference Papers, Creative and Literary Works (RGC: 12, 32, 41, 45)32_Refereed conference paper (with ISBN/ISSN)Not applicablepeer-review

View graph of relations

Author(s)

Related Research Unit(s)

Detail(s)

Original languageEnglish
Title of host publicationProceedings - ICSSSM'06: 2006 International Conference on Service Systems and Service Management
Pages313-318
Volume1
Publication statusPublished - 2007

Publication series

Name
Volume1

Conference

TitleICSSSM'06: 2006 International Conference on Service Systems and Service Management
PlaceFrance
CityTroyes
Period25 - 27 October 2006

Abstract

We present a joint decision model which combines the decisions of setting selling price and determining manufacturing batch size with an ultimate objective of maximizing a utility function, the demand for the product is both price-dependent and uncertain. We show that there exists a unique optimal selling price and manufacturing batch size, the optimal manufacturing batch size is decreasing in holding cost and increasing in demand variance, the optimal selling price is increasing in holding cost and decreasing in demand variance, the optimal objective utility function is decreasing both in holding cost and demand variance. Comparing the simultaneous decisions, we bring out that if there no demand variance, the optimal selling price and the optimal manufacturing batch size with sequential decisions is equal; if the demand is stochastic, with sequential decisions, the optimal selling price is higher, the optimal manufacturing batch size is lower, and optimal objective utility is sub-optimal with some utility loss. © 2006 IEEE.

Research Area(s)

  • Joint pricing-production decisions, Objective utility function, Stochastic price-dependent demand

Citation Format(s)

Joint pricing-production decisions with stochastic price-dependent demand. / Chen, Xu; Hao, Gang.

Proceedings - ICSSSM'06: 2006 International Conference on Service Systems and Service Management. Vol. 1 2007. p. 313-318 4114452.

Research output: Chapters, Conference Papers, Creative and Literary Works (RGC: 12, 32, 41, 45)32_Refereed conference paper (with ISBN/ISSN)Not applicablepeer-review