Dynamic inventory control game for perishable products with concurrent probabilistic demands from two-fare classes

Jingpu SONG, Liping LIANG

Research output: Journal PublicationsJournal Article (refereed)Researchpeer-review

Abstract

With the existence of uncertain demands and competitors, a seller's inventory control policy for perishable products can significantly affect the seller and consumers due to its effects on the seller's revenue, transferred demand, and product availability. In this paper, we consider two sellers selling substitutable products in a market where the ordering requests from different fare classes arrive concurrently. We formulate this problem as a two-player two-fare-class dynamic inventory control game, and examine the optimal accept/reject policies in both non-cooperative and cooperative situations. Our results shed light on three issues: the impact of transferred demand on a seller's revenue, the structure of the optimal inventory control policy, and the importance of cooperation for sellers in the presence of transferred demand.
Original languageEnglish
Pages (from-to)82-107
Number of pages26
JournalInternational Journal of Inventory Research
Volume2
Issue number1/2
Early online date17 Dec 2013
DOIs
Publication statusPublished - 2013

Fingerprint

Inventory control
Perishable products
Seller
Revenue
Competitors
Product availability
Uncertain demand

Keywords

  • cooperation
  • Nash equilibrium
  • perishable product
  • inventory control
  • game

Cite this

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Dynamic inventory control game for perishable products with concurrent probabilistic demands from two-fare classes. / SONG, Jingpu; LIANG, Liping.

In: International Journal of Inventory Research, Vol. 2, No. 1/2, 2013, p. 82-107.

Research output: Journal PublicationsJournal Article (refereed)Researchpeer-review

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AB - With the existence of uncertain demands and competitors, a seller's inventory control policy for perishable products can significantly affect the seller and consumers due to its effects on the seller's revenue, transferred demand, and product availability. In this paper, we consider two sellers selling substitutable products in a market where the ordering requests from different fare classes arrive concurrently. We formulate this problem as a two-player two-fare-class dynamic inventory control game, and examine the optimal accept/reject policies in both non-cooperative and cooperative situations. Our results shed light on three issues: the impact of transferred demand on a seller's revenue, the structure of the optimal inventory control policy, and the importance of cooperation for sellers in the presence of transferred demand.

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