Dynamic Pricing And Inventory Control Decision-making

With the coming era of growing economy globalization and market-driven, a series of issues emerges such as indefinite market, shorter product life span and purchasing lead-time elongation, which are of growing difficulty on product pricing and inventory control. Manufacturing and service industries are all highly concerned with how to ensure supplying products to satisfy the demands of products. However, current supply chain policy and revenue management technology applying in enterprises only focus on one end of balance between supply and demands, either supply side or demand side. With information level of enterprise being elevated, plus development of E-commerce and internet, especially the application of customer relationship management system makes amounts of manufacturing enterprises introduce revenue management methods to handle balance between supply and demand issues under indefinite environments as well as utilize supply chain management. As above, it is of theoretical and practical importance to choose research on joint decision issue covering dynamic pricing and inventory control in supply chain.This thesis is based on the above background to research on joint decision between dynamic pricing and inventory control. First of all, documentation and data are collected and processed on certain topic in global scale, which introducing current research situation, analyzing improper points based on current models. Secondly, basic concepts, models and characteristics are described in detail on dynamic pricing and inventory control to analyze advantages and disadvantages of both theories on supply and demand balance. At the same time, comparison between dynamic pricing policy and static pricing policy indicates the necessity and economic preference of dynamic pricing. Thirdly, based on utility function aspect, definite and random demand function of products has been improved, considering 6 critical factors. As a result, demand function will reflect indefinite characteristics in different steps in product sales life span and relationships between itself and price. A joint decision model between dynamic pricing and inventory control has been set up to ensure maximum profit for retailed dealers. These models will show up as a complex dynamic programming (control) model. Analytical methods such as statistics and random process, optimized control and dynamic plan etc. have been used to discuss on properties of built model. Utilize Matlab or Lingo to get solutions of the models in demand to simplify implementation of optimized policy to support joint decision system for enterprise management. The case study is to compare and analyze the properties of model solutions and how changes of parameters influence optimized profit. Finally, a decision model, which has requirement prediction with updating mechanism, has been proposed based on the model above. The dicision model enables enterprises to change sales price and order volume on live according to actual sales situation to achieve maximum profit.