Title: The impacts of supply disruptions and dynamic pricing on a continuous-review inventory system with price-sensitive customer demands

Authors: Yuerong Chen; Shengyong Wang

Addresses: Department of Mechanical Engineering, University of Akron, Akron, OH 44325, USA ' Department of Mechanical Engineering, University of Akron, Akron, OH 44325, USA

Abstract: This paper considers an inventory system that consists of a supplier, a retailer, and customers. The retailer adopts a continuous-review inventory policy, applies dynamic pricing and is subject to supply disruptions. Customer demands are price-sensitive. The inventory system is simulated and the impacts of supply disruptions and dynamic pricing are investigated. The experimental results provide managerial suggestions to the retailer. For instance, the retailer should pay more attention to supply disruption duration than disruption frequency. Besides, the retailer ought to consider the scenarios of supply disruptions and customer demand variation before making a dynamic pricing strategy.

Keywords: inventory systems; supply disruptions; dynamic pricing; price-sensitive demand; customer demand; continuous review; inventory policy; simulation.

DOI: 10.1504/IJSPM.2012.049818

International Journal of Simulation and Process Modelling, 2012 Vol.7 No.4, pp.240 - 248

Received: 15 Jun 2011
Accepted: 17 Aug 2011
Published online: 15 Nov 2014 *

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