Comparative Statics Analysis of An Inventory Management Model with Dynamic Pricing, Market Environment Fluctuation, and Delayed Differentiation

• 成果类型: Article
• 署名作者: Yang, Nan; Zhang, Renyu
• 署名单位: University of Miami; New York University; NYU Shanghai; Chinese University of Hong Kong
• 刊物名称: PRODUCTION AND OPERATIONS MANAGEMENT
• ISSN/ISSBN: 1059-1478
• DOI: 10.1111/poms.13538
• 发表日期: 2022
• 页码: 341-357
• 关键词: joint pricing and inventory management; delayed differentiation; comparative statics analysis

摘要

We consider a general joint pricing and inventory management model with delayed differentiation, in which a firm serves a market with multiple products made from a generic one. The firm holds inventory for the generic product which is produced using multiple resources. Moreover, the market size, the attractiveness of each product, the firm's productivity, and the procurement cost of each resource all evolve over the planning horizon driven by an exogenous Markov process. Comparative statics analysis is essential for studying this model, offering insights on the impact of market environment fluctuation upon the firm's optimal pricing and inventory policy. Hence, we propose a new approach that combines the advantages of implicit function theorem (IFT) and monotone comparative statics (MCS) approaches to perform comparative statics analysis in our joint pricing and inventory management model under market environment fluctuation. The new approach applies to our model where the standard IFT and MCS methods are not easily amenable. Using our new comparative statics approach, we characterize the optimal pricing and production policy of the firm, and offer insights on how the firm should adaptively respond to market environment fluctuations.