This paper considers a multi-period supply chain model in which a supplier sells to a multi-period newsvendor. Such a problem is relevant in industries with long production lead times. We study the optimal pricing problem for the supplier. We derive procedures for solving the optimal prices and show that the optimal pricing sequence is decreasing in time. We also show that the optimal prices are increasing in the backorder cost when the cumulative demand functions have increasing generalized failure rates.
- Supply chain management