Pricing and purchasing with increasing costs of replenishment: an extension of the newsvendor problem

Replenishment costs increase, and salvage value decreases with time in many goods and services contexts. Previous research on the newsvendor pricing problem has not addressed this situation. This research models pricing, and quantity ordering decisions, in a dynamic setting. A two-period dynamic problem is solved to obtain insights about the existence and uniqueness of the equilibrium solution in different conditions, and is demonstrated with a numerical example.