In the newsvendor problem with pricing, the seller of homogeneous items decides both price andinventory level before exact demand is known. Whereas the well-known fractile solution to thenewsvendor problem treats price as exogenous and provides a single inventory level solution, wepresent a probabilistic-based model in which not only is price a decision variable, but two priceinventorylevels are set. We provide a numerical example comparing the optimal conditionsfound using our model and compare it with those found using an existing method.
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