| Assortment planning and pricing are among the most important strategic questions for many firms. These decisions are particularly challenging when inventory considerations need to be taken into account. Unfortunately, the trade-offs created by the assortment, pricing and inventory decisions are complicated enough to push many firms to make these decisions separately, ignoring their synergy. This dissertation targets this gap by presenting joint assortment and pricing models with inventory considerations.;The first setting studied in this dissertation is a single firm selling a configurable product (e.g. a laptop computer), formed by putting together two components: one required (e.g. processor) and one optional (e.g. DVD writer). This dissertation finds that the optimal prices are such that all variants of a component share the same effective profit margin, defined as the unit gross margin net of unit inventory-related cost, which itself depends on unit underage and overage costs, service level and demand variability. As for assortment selection, the importance of a variant's surplus is shown. When variants are put together to form a product configuration, their surpluses combine to yield the attractiveness of the product configuration; whose role in selecting the assortment is highlighted in this dissertation. Furthermore, this dissertation finds that, if the optional component's assortment and margin influence the customer's decision to purchase from the firm, then the component must be priced at effective cost. This is no longer true if only the required component affects the customer's decision to purchase from the firm.;The second setting studied here involves a dual-channel supply chain, where a manufacturer sells substitutable products directly to the customer and also through an independent retailer. This dissertation finds that the wholesale prices in such a supply chain exhibit a structure in which the wholesale margins weighted by a function of service levels and demand variability must be common across all variants. In addition, this work characterizes scenarios where the manufacturer's and retailer's assortment preferences are in conflict. In particular, this work shows that the manufacturer may prefer the retailer to carry items with high demand variability while the retailer prefers items with low demand variability. |
