Competition under time‐varying demands and dynamic lot sizing costs |
| |
Authors: | Awi Federgruen Joern Meissner |
| |
Affiliation: | 1. Graduate School of Business, Columbia University, New York, New York 10027;2. Lancaster University Management School, Lancaster LA1 1YX, United Kingdom |
| |
Abstract: | We develop a competitive pricing model which combines the complexity of time‐varying demand and cost functions and that of scale economies arising from dynamic lot sizing costs. Each firm can replenish inventory in each of the T periods into which the planning horizon is partitioned. Fixed as well as variable procurement costs are incurred for each procurement order, along with inventory carrying costs. Each firm adopts, at the beginning of the planning horizon, a (single) price to be employed throughout the horizon. On the basis of each period's system of demand equations, these prices determine a time series of demands for each firm, which needs to service them with an optimal corresponding dynamic lot sizing plan. We establish the existence of a price equilibrium and associated optimal dynamic lotsizing plans, under mild conditions. We also design efficient procedures to compute the equilibrium prices and dynamic lotsizing plans.© 2008 Wiley Periodicals, Inc. Naval Research Logistics 2009 |
| |
Keywords: | competitive pricing fixed and variable procurement costs time varying demand and cost functions oligopoly models |
|
|