Dissertation for receiving the degree of Master “M.Sc”
Industrial Engineering-Industrial Engineering
Summer 1392
Abstract:
In today's era, you can find fewer companies that focus exclusively on the production of one product. The reason for this issue There is a variety of customers in the market, and in order for the company to gain more market share, it needs to consider the tastes of more of its customers. To achieve this goal, companies have turned to the production and supply of several products. That is, products whose demand does not depend only on the price of the product itself, but also depends on the price of other products, or they use a common source for production or distribution. Another aspect that should be considered in the issue of pricing is that unlike in the past, inventory and pricing decisions are taken separately, due to the mutual effect that these decisions have on each other and in As a result, they affect the profit of the whole company, it is not possible to separate the price and the inventory, and considering these two issues together, it is necessary for the decision maker to make the right decision in the conditions close to the real world. The maximum profit will be taken. On the other hand, in the issue of pricing, one of the factors that plays a very important role in maximizing profit is the demand factor. The issues that should be considered in this regard is that in many cases, companies do not have much information available about product sales in previous periods. Therefore, it is not possible for them to forecast the market and as a result to estimate the demand (for example, due to the newness of the product). Considering the importance of the above and in order to fill the gap in the literature on pricing and inventory control of multiple products, a model is presented in this research: pricing and inventory control in a way that depends on the demand The price and cost of advertising in the market with limited storage capacity. In this research, the designed function, while maximizing the total profit, has also calculated the production quantities and marketing cost per product, as well as the production price. Due to the non-linearity and certainty of the model, according to the reference of the basic article, the solutions become intractable with the increase in the volume of the problem, which according to the numerical example used and the solution of the Lingo software, the resulting solutions in different conditions are often locally optimal. In this issue, 5 factors have been analyzed, 3 of which are related to the demand function and the other two are related to the number of goods and the number of courses. The results showed that the most important factor on the profit is the effect of market advertising and also the price is one of the influencing factors on the answer space.
Key words: dynamic pricing – Inventory control – multi-product goods – revenue management – Marketing
Chapter One
Introduction and Generalities
Introduction and Generalities
1- Introduction:
Determining the appropriate inventory control policy and the optimal selling price for various goods is always one of the main topics of scientific and industrial research. In today's highly dynamic market environment, as the product, market and competition changes over time, the company's marketing strategies must also change. Time plays a very important role in the relationship between inventory and demand. The product life cycle can express the changes that the company applies to the product movement in its life cycle. Pricing strategies should also be coordinated with other company strategies. Managers must know how to set the right price. The main issue of inventory management issues is to optimize the amount of economic order or determine the size of the production batch according to the capacities and limitations in order to minimize the total costs related to the order, purchase, maintenance and delivery or to maximize the total profit related to the inventory management and control system. Issues such as the amount and time of orders for raw materials or semi-finished parts, determining the type of inventory control system, determining the capacity of various types of warehouses and planning for timely and economical delivery of orders are included in this discussion. In this regard, the economic order quantity model (EOQ) and the economic production quantity model (EPQ) are widely used to determine the size of the order batch or production in inventory management and control systems. Profitability resulting from any operation carried out by the company, whether in critical conditions or in normal conditions, is affected by pricing strategy decisions, inventory control and production.In the past, companies used a static pricing policy to determine the price for their products, the reason for using this pricing was the lack of access to the information required in the market and customer needs, but today, with the advancement of technology, it has become much easier to access customer information and overcome the complexities of decision-making due to market conditions, and very suitable approaches to determine the price dynamically have emerged. It is very important. Static adoption policies that are normally implemented are very small compared to dynamic policies In each of the mentioned policies, the price and production rates are adjusted and prepared separately in additional times. In fact, the demand in particular as well as other system parameters grow separately in additional times. Today, many and different distribution channels such as the Internet allow distributors to change prices at different times, especially at the end of courses, so that they can get maximum profit from the implementation of dynamic strategies. The dynamic strategy specifically requires that during the time horizon of production and planning, the production rate and price are determined and specified continuously at all times in order to maximize the net profit, while we need to follow some restrictions such as the production capacity limit and the available inventory capacity, which in addition to the inventory maintenance costs and production costs will also be added to our account. In addition, when the company begins to produce multiple products simultaneously, new decisions must be made to allocate capacity for new products during the production process. Researchers often raise uncertainty issues when the model parameters are determined. Ignoring the uncertainty may not have the required efficiency and benefit in the strategy if and only if the obtained value of the model parameters is different from the estimated value of the model. In fact, this strategy may be less desirable than required and may also become intractable if existing constraints are violated. Therefore, it is very important to design a way to accommodate uncertainty in the system to the point where there is room to propose feasible solutions without adopting unrealistic assumptions, but if certainty is taken into account for the available data, the solutions move away from general optimality and towards local optimality and feasibility. In this research, exclusive markets with different products are investigated where there are multiple sales targets for the same potential buyers. In some existing settings, the price of each company's products will be affected by the existing demand for that company's products. In other words, the demand is considered as a parameter and an effective factor on the company's production, so that its price is applied only within the company. Also, an issue that has received a lot of attention today in revenue management issues is the simultaneous review of price and inventory as the basis of revenue management, the reason for this is due to the increasing competition in the commercial markets and the variety of customers' tastes, so the company must be able to coordinate the decisions related to price and inventory at the same time in order to obtain the largest market share and respond to the diverse needs of customers. Multiple goods [1] The importance of this issue comes from the fact that in this type of goods, the demand of each product is not only dependent on the price of that product, but also depends on the price of other products. Therefore, determining the optimal price and inventory for these types of goods according to the conditions Their specifics are very important. In general, this research examines the problem of dynamic pricing and inventory control for several products in a progressive manner, taking into account the definite demand and dependent on the sales price and marketing cost and in the condition of lack of available capacity.