pricing and scheduling decisions with leadtime flexibility this paper studies a problem faced by a manufacturer who has the ability to set prices to influence demand reject orders and set leadtimes or due dates for accepted orders we present decision models that integrate pricing and production decisions for the cases where the manufacturer charges the same price or different prices to different customers through numerical analyses we present insights regarding the benefits of price customization leadtime and inventory flexibilities in various demand environments

coordination of pricing and multiple period production across multiple constant priced goods this paper addresses the problem of jointly determining prices and production schedules for a set of items that are produced on the same production equipment under the assumptions that the production setup costs are negligible and that demand is seasonal but price dependent we exploit the special structure of the problem to develop a solution procedure through a set of numerical examples we demonstrate how a product s contribution to aggregate seasonality can increase its optimal price our examples also demonstrate that among products that experience demand peaks during the firm s busy season those that peak early in the busy season should be priced more aggressively than those that peak later

coordination of pricing and multi period production for constant priced goods this paper addresses the problem of jointly determining a single price and production schedule for a product with seasonal demand under the assumption that the ratio of the demands in any two periods does not depend upon the price at which the product is offered we develop a procedure that guarantees an optimal solution perhaps more importantly however our model provides insight into the manner in which the firm s production cost increases with the intensity of total demand

the analysis of optimal control model in matching problem between manufacturing and marketing abstract a mathematical model is developed and presented to solve the optimal control problem in matching between manufacturing and marketing when the market demand possesses the property of linearity the main purpose of this paper is to investigate the optimal choice between production rate which may affect the inventory level and the optimal sales rate at each time through different pricing strategies so as to achieve the maximum profit for a given planning horizon the results demonstrated that the relative size of the output yielded by minimizing average cost and yielded by maximizing profit at constant zero inventory can determine the optimal production rate and sales rate furthermore the optimal inventory policy can be determined to be a constant zero inventory policy or constant positive inventory policy or mixed inventory policy according to the value of optimal production rate

optimal joint pricing and lot sizing with fixed and variable capacity this paper examines previously unexplored fixed and variable capacity problems of jointly determining an item s price and lot size for a profit maximizing firm facing constant but price dependent demands over a planning horizon we apply geometric programming to these constrained nonlinear maximization problems with nonconcave objective functions and obtain global optimal solutions using kuhn tucker condition marginal and sensitivity analyses we investigate model interactions provide managerial implications on the optimal capacity decisions and explore the postoptimal behavior of the price lot size and capacity expansion and reduction size some findings cast interesting insights different from previous just in time management studies without pricing consideration

the principal agent relationship with an informed principal ii common values in many circumstances a principal may have relevant private information when she proposes a contract to an agent we analyze such a principal agent relationship as a noncooperative game the principal proposes a contract which is accepted or rejected by the agent who for most of our analysis has no private information the contract is executed if accepted otherwise the reservation allocation takes effect this allocation may be determined by a pre existing contract which the principal by her proposal is attempting to renegotiate or it may simply be the no trade point in this paper we assume that the principal s information directly affects the agent s payoff before solving the game we discuss pareto efficiency with asymmetric information we define an incentive compatible allocation to be weakly interim efficient wie if there exists no alternative incentive compatible allocation that both parties prefer for all possible beliefs that the agent might have about the principal s private information type we show that any wie allocation is interim efficient ie for some beliefs the rothschild stiglitz wilson rsw allocation relative to the reservation allocation l is the allocation that maximizes the payoff of each type of principal within the class of incentive compatible allocations that guarantee the agent at least the utility he gets from a irrespective of his beliefs about the principal s type the equilibrium set of the contract proposal game consists of the allocations that weakly pareto dominate the rsw allocation thus there is a unique equilibrium outcome if and only if the latter is ie and the equilibrium outcome is the rsw allocation itself after characterizing the equilibrium allocations we study those that are renegotiation proof when either the principal or the agent leads the renegotiation we then compare our contract proposal game which is a signaling model with its screening counterpart we conclude by extending our results to the case in which the agent as well as the principal has private information under the assumption of quasi linear preferences

modeling long term dynamics of electricity markets in the last decade many countries have restructured their electricity industries by introducing competition in their power generation sectors although some restructuring has been regarded as successful the short experience accumulated with liberalized power markets does not allow making any founded assertion about their long term behavior long term prices and long term supply reliability are now center of interest this concerns firms considering investments in generation capacity and regulatory authorities interested in assuring the long term supply adequacy and the stability of power markets in order to gain significant insight into the long term behavior of liberalized power markets in this paper a simulation model based on system dynamics is proposed and the underlying mathematical formulations extensively discussed unlike classical market models based on the assumption that market outcomes replicate the results of a centrally made optimization the approach presented here focuses on replicating the system structure of power markets and the logic of relationships among system components in order to derive its dynamical response the simulations suggest that there might be serious problems to adjust early enough the generation capacity necessary to maintain stable reserve margins and consequently stable long term price levels because of feedback loops embedded in the structure of power markets and the existence of some time lags the long term market development might exhibit a quite volatile behavior by varying some exogenous inputs a sensitivity analysis is carried out to assess the influence of these factors on the long run market dynamics

incentive schemes as a signaling device abstract this paper considers a model of moral hazard where the principal has private information for instance in an organizational setting the firm may be better informed about the profitability of a sales area for which it seeks to employ a new sales representative we show how this information asymmetry may lead to a game of signaling which can mute incentives

comparing allocations under asymmetric information coase theorem revisited abstract this paper investigates the robustness of coase theorem under asymmetric information we identify the conditions under which the same allocation is attained as an equilibrium in a bilateral trade model no matter which informed or uninformed party has the bargaining power to make a contract offer

on the role of commitment in a principal agent relationship with an informed principal abstract in many circumstances a principal who has private information when contracting with an agent may perform some further action simultaneously with or after the agent s choice of an action we analyze such a principal agent relationship with an informed principal as a noncooperative game and distinguish two extensive form games first the principal can commit to his subsequent action at the time of contracting second the principal s announcement for his action is not binding at the time of performance we show that commitment by the principal leads to separation and no commitment leads to pooling journal of economic literatureclassification numbers c72 d82

joint production and pricing decisions with setup costs and capacity constraints we consider the problem of setting prices and choosing production quantities for a single product over a finite horizon for a capacity constrained manufacturer facing price sensitive demands there is a fixed cost per production run and a variable cost per unit produced both of which may vary by period we characterize properties of the optimal solution considering cases with constant and time varying capacity and with and without speculative motive for holding inventory we show that counter to intuition optimal prices may increase as the capacity increases even when capacity is constant over the horizon we also show that increases in capacity do not always exhibit diminishing marginal returns our procedure produces solutions with much higher profits than can be obtained from a sophisticated sequential procedure in which a well informed and optimum seeking marketing department makes pricing decisions and the manufacturing department seeks to satisfy the resulting demands at minimum cost our results also suggest that firms with seasonal demand and tight capacity constraints should be more aggressive in setting prices to manage their demands than what is typically done in practice finally we discuss how a decision maker can use our procedure as an aid in solving multiproduct versions of the problem

informed principal moral hazard and the value of a more informative technology we analyze a principal agent model with moral hazard in which the principal has private information about the technology we characterize perfect bayesian equilibria of the contracting game that possess the following properties i a principal with a more informative technology ends up earning less profits than a principal with a less informative one does ii compared to the complete information case the actions implemented by the privately informed principal can be distorted iii the agent can end up being better off when the principal has private information

optimal pricing and production in an inventory model abstract this paper deals with the problem of simultaneously determining the optimal price policy and production rate over a given planning horizon for nonlinear demand functions and convex inventory and shortage cost functions the optimal solution paths are derived by using optimal control theory the treatment of linear nonsmooth cost functions requires the use of a generalized maximum principle the solution method is a phase portrait analysis providing insight into the optimal pricing and production policies as well as the resulting inventory paths moreover it is shown that in the case of nonsmooth piecewise linear cost functions the equilibrium is approached within finite time although the model is nonlinear in the control variables finally it is illustrated that exogenous fluctuations in the demand rate seasonal demand pattern amount to cyclical optimal solutions

canadian interregional electricity trade analysing the gains from system integration during 1990 2020 abstract using a multiperiod multiregional linear programming model of canadian electric power supply allowing for technology choice and power transmission we estimate the long term gains from interregional trade in electrical energy measured in terms of supply cost reduction these gains are substantial in absolute terms but proportionately small about 5 other performance measures however such as aggregate coal consumption uranium consumption nuclear capacity expansion and plant capital costs vary considerably between self sufficiency for each region and complete interregional supply integration alternative objectives to minimum supply costs therefore acquire greater importance for selecting a socially optimal degree of regional cooperation

contractual signaling in a market environment abstract we consider a game of signaling where the informed sender proposes a contract which can only be accepted or rejected by the receiver while most of the literature considers a bilaterally monopolistic setting we embed the game in a market environment where a sender may switch to another receiver in case of rejection we analyze how this structural extension can be employed to restrict the set of stationary equilibrium allocations journal of economic literature classification number c78 d82

reinforcement learning for joint pricing lead time and scheduling decisions in make to order systems the paper investigates a problem faced by a make to order mto firm that has the ability to reject or accept orders and set prices and lead times to influence demands inventory holding costs for early completed orders tardiness costs for late delivery orders order rejection costs manufacturing variable costs and fixed costs are considered in order to maximize the expected profits in an infinite planning horizon with stochastic demands the firm needs to make decisions from the following aspects which orders to accept or reject the trade off between price and lead time and the potential for increased demand against capacity constraints we model the problem as a semi markov decision problem smdp and develop a reinforcement learning rl based q learning algorithm qla for the problem in addition we build a discrete event simulation model to validate the performance of the qla and compare the experimental results with two benchmark policies the first come first serve fcfs policy and a threshold heuristic policy it is shown that the qla outperforms the existing policies

pricing and manufacturing decisions when demand is a function of prices in multiple periods in most deterministic manufacturing decision models demand is either known or induced by pricing decisions in the period that the demand is experienced however in more realistic market scenarios consumers make purchase decisions with respect to price not only in the current period but also in past and future periods we model a joint manufacturing pricing decision problem accounting for that portion of demand realized in each period that is induced by the interaction of pricing decisions in the current period and in previous periods we formulate a mathematical programming model and develop solution techniques we identify structural properties of our models and develop closed form solutions and effective heuristics for various special cases of our models finally we conduct extensive computational experiments to quantify the effectiveness of our heuristics and to develop managerial insights

effects of a european electricity market on the german electricity industry results from a simulation model of the european power systems the introduction of an european common market for electricity and the opening of the power markets to eastern europe and scandinavia will have a drastic and lasting effect on the structure of the german electricity industry this paper presents an evaluation of the possible effects of a single market especially on the power trade within europe and the german power plant system one special aspect is the investigation whether a flooding of the german electricity market with french nuclear power could happen scenario simulations reject the argumentation that a european common market for electricity would lead to a dramatic increase in international electricity trade

pricing and lead time decisions for make to order firms with contingent orders abstract make to order mto firms have few standard products and volatile difficult to predict demand a production order usually stems from a successful bid which presents the mto firm s terms including price and lead time to satisfy a prospective customer s stated requirements the customer may decide to accept reject or modify these terms until the customer decides the tendered bid is a contingent demand on the mto firm s future production capacity in the short run this capacity may be relatively fixed and if the customer awards the contract to another bidder it may simply go to waste to hedge against this possibility the mto firm can bid on other projects that require the same capacity however this strategy introduces a new source of lead time uncertainty if two or more booked orders must contend for the same resources some work will inevitably be bumped to later time periods thus a hedging strategy carries the risk of penalties for late deliveries in this paper we model this little discussed source of lead time uncertainty and introduce a technique that simultaneously optimizes pricing and lead time decisions for mto firms with contingent orders we illustrate the procedure with a simple numerical example

price delivery time guarantees and capacity selection this paper studies the impact of using delivery time guarantees as a competitive strategy in service industries where demands are sensitive to both price and delivery time we assume that delivery reliability is crucial and investment in capacity expansion is plausible in order to maintain a high probability of delivering the time guarantee a mathematical framework is proposed to understand the interrelations among pricing delivery time guarantee and capacity expansion decisions specifically an optimization model is developed to determine the joint optimal selection of these three important decision variables with an objective of maximizing the average net profit we characterize the optimal decisions and study their qualitative behaviors as various parameters change we further present a numerical example to illustrate how the results of our model can be used to provide useful managerial insights for selecting the best competing strategies for firms with different operating characteristics our model and results are also applicable to a make to order manufacturing environment