On some problems in supply chain management and dynamic pricing

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The objective of the proposed research is to investigate the following topics in supply chain management: (i) Additive price-dependent newsvendor model. In a previous research project, we have studied the multiplicative price-dependent newsvendor model. We have analyzed, e.g., the effectiveness of returns policies and the effect of postponement strategies in this model. One of my objectives is to carry out a similar analysis when the demand model is additive rather than multiplicative. The additive model is quite popular in the literature, and is appropriate when the variance of demand is independent of demand level. (ii) Decentralized assembly systems. In a previous research project we have analyzed decentralized assembly (DA) systems. We have demonstrated that there exist two sources of inefficiencies in a DA system: the traditional and well-studied vertical double marginalization, and the horizontal double marginalization (HDM), which essentially was not studied before. We have clarified the drivers of HDM, and have designed coordination schemes to eliminate it. One of the objectives of the proposed research is to extend the analysis to the case when the retail price is a decision variable determined by the assembler. (iii) Dynamic pricing under competition. In a previous research project we have incorporated competition in a fixed inventory, dynamic price setting. In our model, two profit-maximizing retailers compete over prices. Consumers visit the retailers in order to observe prices, and purchase the good if the price is below their valuations. Otherwise, they visit the other retailer in the next period. We have demonstrated that under competition, prices decrease exponentially and the profit loss of the system is quite substantial. One of the objectives of the proposed research is to pursue the case when the consumers are strategic.