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- Title
Dynamic joint pricing and production policy for perishable products.
- Authors
Feng, Lin; Zhang, Jianxiong; Tang, Wansheng
- Abstract
Abstract: A joint dynamic pricing and production problem for perishable products without shortages is considered. The demand rate is price‐dependent and time‐varying. This paper constructs an optimal control model to maximize the total profit under a general nonlinear production cost function. The feature of the optimal joint dynamic pricing and production policy is analyzed by solving the corresponding optimal control problem on the basis of improved Pontryagin's maximum principle. Then, an effective algorithm is designed to obtain the optimal joint policy. The case of the joint static optimal policy is also investigated and compared with the dynamic one. Finally, numerical examples are presented to illustrate the effectiveness of the proposed methods, and some managerial implications are provided for the management of perishable items.
- Subjects
TIME-based pricing; OPTIMAL control theory; PROFIT; INDUSTRIAL costs; COST functions
- Publication
International Transactions in Operational Research, 2018, Vol 25, Issue 6, p2031
- ISSN
0969-6016
- Publication type
Article
- DOI
10.1111/itor.12239