Joint pricing and production control for a manufacturer with volume flexibility

Liuxin Chen, Matthew F. Keblis

Research output: Contribution to journalArticle

Abstract

We consider a make-to-stock manufacturer that produces a single product and sells it through two different channels, one local and the other contractual. We determine how to manage production and pricing in the local channel in order to maximize the total expected discounted profit earned over an infinite time horizon. We characterize the optimal policy as comprising a base stock level for production control and a collection of thresholds for product pricing in the local channel.

Original languageEnglish
Article number7360893
Pages (from-to)4247-4252
Number of pages6
JournalIEEE Transactions on Automatic Control
Volume61
Issue number12
DOIs
Publication statusPublished - Dec 2016

Keywords

  • Base stock policy
  • Dynamic pricing
  • Inventory management
  • Make-to-stock
  • Threshold policy

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