Title :
Optimal price, stock and channel with stochastic demand
Author :
Ding, Jiali ; Liu, Xiangdong
Author_Institution :
North China Electr. Power Univ., Beijing, China
Abstract :
Based on a model of Stackelberg game between the manufacturer and the retailer, this paper offers the joint optimization on price, stock and channel for the manufacturer when the market demand is stochastic with linear additive shock. We find that the optimal price is decreasing with price elasticity, while the optimal stock is increasing with revenue share ratio, decreasing with price elasticity and retail channel cost. Simulations reveal that both manufacturer and retailer benefit from the dual-channel structure under certain conditions while such benefit for manufacturer and retailer follow different changing patterns as price elasticity, demand fluctuation and revenue sharing ratio changes.
Keywords :
marketing; optimisation; pricing; stock control; Stackelberg game; demand fluctuation; dual-channel structure; linear additive shock; market demand; optimal price; optimal stock; price elasticity; price optimization; retail channel cost; revenue share ratio; revenue sharing ratio changes; stochastic demand; Additives; Elasticity; Electric shock; Fluctuations; Games; Marketing and sales; Stochastic processes; Stackelberg game; pricing; stochastic demand; stock control; supply chain optimization;
Conference_Titel :
Artificial Intelligence, Management Science and Electronic Commerce (AIMSEC), 2011 2nd International Conference on
Conference_Location :
Deng Leng
Print_ISBN :
978-1-4577-0535-9
DOI :
10.1109/AIMSEC.2011.6010806
