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Title: The price-setting limited clearance sale inventory model
Authors: Biswas, Indranil
Avittathur, Balram
Keywords: Inventory
Limited clearance sale
Supply contracts
Issue Date: 2018
Publisher: SCOPUS
Annals of Operations Research
Springer New York LLC
Abstract: The classical newsvendor problem decides the optimal order quantity for a single period, with the assumptions that both the selling price and the end of period salvage value are fixed. However, the salvage value or clearance price in many instances depends on the leftover inventory. A fixed salvage value assumption could lead to suboptimal decisions in many situations. In this paper we determine the optimal pricing and ordering decision for a limited clearance sale inventory model using newsvendor framework with variable salvage value. We consider additive demand model, provide necessary and sufficient conditions for unique pricing and ordering policies, and calculate optimal contract parameters for wholesale price contract in decentralized supply chain setting. We compare our results against classical newsvendor model with fixed salvage value. We analytically prove that the price-setting limited clearance sale inventory model improves the ordering decision and profit level. � 2018 Springer Science+Business Media, LLC, part of Springer Nature
Description: Biswas, Indranil, Indian Institute of Management Lucknow, Prabandh Nagar, Lucknow, 226 013, India; Avittathur, Balram, Indian Institute of Management Calcutta, Joka, Kolkata, 700 104, India
ISSN/ISBN - 02545330
DOI - 10.1007/s10479-018-2811-5
Appears in Collections:Operations Management

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