Joint Optimization Of Pricing And Inventory For Dual-channel Retailers Under Reference Price Effect

With the rapid development of information technology and the subversive change of mobile Internet technology to the retail industry,the dual-channel retailing is rising rapidly.The inventory management of retailers under the dual-channel environment is more complicated.This is because consumers can easily obtain the historical prices of a commodity,which makes the status of consumers stand out.Consumers form a price expectation in their hearts,called the reference price,which is used as the benchmark to measure the current price of the commodity and make a decision whether to buy or not,which in turn has a huge impact on the retailers’ pricing and inventory decisions.It can be seen that the joint optimization of pricing and inventory under the dualchannel mode is deeply concerned by management scholars and retail operators.Thus,it is particularly important to study the influence mechanism of the reference price effect on the joint pricing and inventory decisions of dual-channel retailers.This dissertation uses stochastic programming,dynamic programming,supermodularity and optimal control theories to study the joint optimization of pricing and inventory for a single commodity of dual-channel retailers with reference price effect.Combined with the reference price effect theory,this dissertation finally establishes the joint optimization theory of pricing and inventory for dual-channel retailers on the basis of solving the optimal pricing and inventory joint decision theory under the dual replenishment model of single-channel retailers.First of all,starting from the single-channel operation management,for the inventory system of dual replenishment models,the retailer’s multi-period pricing and inventory strategies under the deterministic reference price effect are studied from the two aspects of regular replenishment without or with lead time.Specifically,the research contents in this field are as follows:(1)Under the condition that the lead time of the regular replenishment is zero,the joint optimization strategies of the retailer’s pricing and inventory are studied.The expedited replenishment can not be carried out if the regular replenishment can meet the demand,and the retailer can also return the remaining inventory of the regular replenishment to the supplier at the end of each period to reduce unnecessary inventory costs.Research shows that optimal price should adopt the base-stock-listprice policy,the regular and expedited replenishment should adopt the basic-stock strategy and dual-threshold strategy,respectively.The consumer demand,sales price,inventory replenishment volume(including both regular and expedited replenishment)and profit are all increase with the reference price.When the reference price increases,even if the retailer’s regular replenishment is surplus at the end of the sales period,the amount of inventory returned to the supplier will decrease.(2)Considering the lead time of regular replenishment,the retailer’s multi-period joint pricing and inventory optimization strategies under the deterministic reference price effect are studied.The retailer’s regular replenishment and expedited replenishment strategies should adopt basic-stock strategies,and the optimal price strategy is related to the initial inventory level and reference price,and decreases as the initial inventory level increases.Theoretical and numerical analysis show that consumer demand,sales price,inventory replenishment volume(including regular and expedited replenishment)and profit are still increase with the reference price.On the basis of clarifying the mechanism of the reference price effect on the single-channel optimal pricing and inventory decision-making,and finally from the perspective of the dual-channel operation and management field,in response to the phenomenon of returns and order cancellations that occur in the implementation of the BOPS sales model,the retailers’ joint optimization strategies of pricing and inventory under deterministic and stochastic reference price effect are studied,respectively.Specifically,the research contents in this field are as follows:(1)The multi-period pricing and inventory joint optimization strategies of dualchannel retailers under the deterministic reference price effect are investigated.It is found that both the optimal price and ending inventory level strategies monotonically convergence to their equilibrium values in time.The direction of convergence depends on the relative position of the initial reference price and the equilibrium price.Numerical analysis results show that retailers’ price and profit are all increase with the reference price.Consumers’ higher reference price will promote demand,thereby reducing inventory level and reducing inventory holding costs at the end of each period.When the retailer’s online channel costs too much freight or the cross-selling profit generated by the physical store increases,if the retailer increases the sales price of the commodity,it will hinder consumers’ desire to buy,leading to an increase in inventory level at the end of each period,and ultimately lead to a lower profit.(2)The continuous-time pricing and inventory joint optimization strategies of dual-channel retailers under the stochastic reference price effect are studied.It is found that the optimal sales price and productivity are both positive correlated with the reference price,but negatively correlated with inventory level.The uncertainty of demand has a negative impact on the profit in the stable state,and the uncertainty of the reference price has a positive impact on the sales price and profit in the stable state.When consumers respond strongly to the gap between the reference price and the actual sales price,or when consumers are more sensitive to the latest sales prices,or when the proportion of online consumers choosing BOPS increases,although the short-term price reduction strategy will increase demand,it is not conducive to longterm profits.Retailers should turn their attention to how to improve consumers’ reference price.When stochastic reference price is taken account,maintaining low productivity and high sales price is always beneficial to retailers’ long-term operation.Finally,taking the representative Rainbow shopping mall as an example,this dissertation analyzes the difficulties faced by the inventory management and operation of Rainbow in the dual-channel operation,and then discusses the dual-channel joint pricing and inventory optimization strategies of Rainbow combined with the research results of above dual-channel pricing and inventory joint optimization of dual-channel BOPS retailers under the reference price effect.