The value of updated information on future price behaviour

This paper studies the value of information on future price behaviour. We consider a one-period inventory modelling framework with random period length and two order opportunities. The selling price is determined dynamically and the demand is price-sensitive. The second ordering-pricing decision reflects the updated information on future price behaviour on supply chain flexibility. We consider three models with different levels of flexibility: the static model, the quantity flexible model and the combined quantity and timing (fully) flexible model. We compare between the values of three different features in the supply chain: updated information on price behaviour, dynamic pricing and supply flexibility. And we demonstrate the effect of holding cost and demand uncertainty on these three values. We also consider a specific condition with fixed selling prices. We give explicit analysis on the optimal order decisions, and analytically show the impact of information and quantity flexibility on the optimal order decisions.


Published in:
International Journal Of Production Research, 52, 7, 2042-2061
Year:
2014
Publisher:
Abingdon, Taylor & Francis Ltd
ISSN:
0020-7543
Keywords:
Laboratories:




 Record created 2014-05-02, last modified 2018-03-17


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