Coordinated Pricing and Production/Procurement Decisions: A Review

It has been nearly 50 years since researchers began to develop analytical models to aid in simultaneous decisions regarding pricing strategy, which influences demands, and production/procurement decisions, which determine the cost of satisfying those demands. In this chapter, we provide a comprehensive review of analytical models on this topic, focusing on models in which external demand is price-sensitive. We review models in both continuous and discrete-time frameworks, considering both constant and time-varying demand functions, with and without demand uncertainty. Although our emphasis is on decision problems facing a single firm, we also provide a brief overview of models involving multiple firms or multiple decision-makers. We also offer suggestions for future research.

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