Volume 56, Number 3, May-June 2022
Recent developments of operations research and data sciences
|Page(s)||1411 - 1427|
|Published online||13 June 2022|
Pricing games of duopoly service-inventory systems with lost sales
Department of Artificial Intelligence and Software, Kangwon National University, 346 Joongang-ro, Samcheok-si, Gangwon-do 29513, Republic of Korea
2 Department of Industrial Engineering, Kangwon National University, 1 Gangwondaehakgil, Chuncheon-si, Gangwon-do 24341, Republic of Korea
* Corresponding author: firstname.lastname@example.org
Accepted: 6 April 2022
This study considers a duopoly market in which two competitors operate their own service-inventory systems. Both competitors determine their prices to maximize their profit while considering the inventory holding cost, ordering cost, and cost incurred by lost sales. Customers are price sensitive, and customer attractiveness is expressed by arrival rates. We use a game theory approach to formulate and analyze three types of pricing games: (i) a parallel pricing game, (ii) a sequential pricing game, and (iii) a unified pricing game. The uniqueness of equilibrium prices is analytically proven, after which, a solution procedure for obtaining equilibrium prices is outlined.
Mathematics Subject Classification: 90B22 / 90B50
Key words: Service-inventory system / lost sales / parallel pricing game / sequential pricing game / unified pricing game
© The authors. Published by EDP Sciences, ROADEF, SMAI 2022
This is an Open Access article distributed under the terms of the Creative Commons Attribution License (https://creativecommons.org/licenses/by/4.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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