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Optimal replenishment and pricing decisions under the collect-on-delivery payment scheme. (English) Zbl 1290.90009

Summary: We study how the timing of payments affects joint replenishment and pricing decisions. Specifically, we consider a periodic review system in which consumers pay upon receiving their goods, referred to as the collect- on-delivery scheme, as opposed to paying when placing their orders, referred to as the instant payment scheme commonly assumed in the literature. We show that a base-stock list price policy is optimal without a fixed ordering cost, and provide a sufficient condition for an \((s,S,p)\) policy to be optimal with a fixed ordering cost. We also perform both analytical and numerical studies to compare the two schemes.

MSC:

90B05 Inventory, storage, reservoirs
91B25 Asset pricing models (MSC2010)
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