The value of updated information on future price behaviour |
| |
Authors: | Shuangqing Liao Romulo I Zequeira Ralf W Seifert |
| |
Affiliation: | 1. College of Management of Technology (CDM), école Polytechnique Fédérale de Lausanne (EPFL), Lausanne, Switzerland.shuangqing.liao@epfl.ch;3. College of Management of Technology (CDM), école Polytechnique Fédérale de Lausanne (EPFL), Lausanne, Switzerland.;4. IMD, Lausanne, Switzerland. |
| |
Abstract: | This paper studies the value of information on future price behaviour. We consider a one-period inventory modelling framework with random period length and two order opportunities. The selling price is determined dynamically and the demand is price-sensitive. The second ordering-pricing decision reflects the updated information on future price behaviour on supply chain flexibility. We consider three models with different levels of flexibility: the static model, the quantity flexible model and the combined quantity and timing (fully) flexible model. We compare between the values of three different features in the supply chain: updated information on price behaviour, dynamic pricing and supply flexibility. And we demonstrate the effect of holding cost and demand uncertainty on these three values. We also consider a specific condition with fixed selling prices. We give explicit analysis on the optimal order decisions, and analytically show the impact of information and quantity flexibility on the optimal order decisions. |
| |
Keywords: | value of information random selling period length supply chain flexibility |
|
|