Dynamic Pricing and Inventory Control: Uncertainty and Competition

• 成果类型: Article
• 署名作者: Adida, Elodie; Perakis, Georgia
• 署名单位: University of Illinois System; University of Illinois Chicago; University of Illinois Chicago Hospital; Massachusetts Institute of Technology (MIT)
• 刊物名称: OPERATIONS RESEARCH
• ISSN/ISSBN: 0030-364X
• DOI: 10.1287/opre.1090.0718
• 发表日期: 2010
• 页码: 289-302
• 关键词: robust optimization approach; variational-inequalities

摘要

In this paper, we study a make-to-stock manufacturing system where two firms compete through dynamic pricing and inventory control. Our goal is to address competition ( in particular a duopoly setting) together with the presence of demand uncertainty. We consider a dynamic setting where multiple products share production capacity. We introduce a demand-based fluid model where the demand is a linear function of the price of the supplier and of her competitor, the inventory and production costs are quadratic, and all coefficients are time dependent. A key part of the model is that no backorders are allowed and the strategy of a supplier depends on her competitor's strategy. First, we reformulate the robust problem as a fluid model of similar form to the deterministic one and show existence of a Nash equilibrium in continuous time. We then discuss issues of uniqueness and address how to compute a particular Nash equilibrium, i.e., the normalized Nash equilibrium.