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A non-myopic dynamic inventory routing and pricing problem
Sayarshad Hamid R
Gao H Oliver
Transportation Research Part E: Logistics and Transportation Review , 2018, 109: 83-98.
Summary
A new framework for the design of a dynamic non-myopic inventory and delivery network between suppliers and retailers under the assumption of elastic demand-one that simultaneously incorporates inventory, routing, and pricing-is proposed. The developed queuing approximation method is based on optimal tolling of queues. We propose a dynamic approach for a supplier who has to deliver products to a number of retailers while maximizing social welfare through dynamic pricing that accounts for customer waiting times, inventory holding, lost-sales costs, and delivery costs. The proposed non-myopic model increases the social welfare by up to 17% compared to the marginal pricing case.
Keywords
Dynamic pricing; Queuing systems; Dynamic inventory routing; Markov decision processes; Inventory management; Infinite-horizon look-ahead
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