Research on Joint Replenishment and Pricing Decision with Stochastic Demand Dependent on Price and Quality

Focusing on customer's purchase character of pursuing low price and high quality, the paper considers stochastic demand dependent on price and quality and brings forward joint replenishment and pricing decision model whose endogenous decision variable is market price and order quantity. The model is proved that it is concave function on price and quantity and its optimal solution is found out. The numerical example shows that (1) the optimal price descends when the perishability rate rises. The descending extent augments as the selling time increases; (2) the optimal order quantity should reduce when the selling time of product prolongs. The product's quantity show dropping trend as perishability rate increases;(3) the product's epxpected profit firstly increases and then reduces when the price rises in a given selling time. The profit is lower with higher perishability rate.