Flexible pricing techniques such as yield management have been successfully applied to a variety of industries, e.g., airlines or rental car agencies, with a focus on those that have perishable inventory. In this paper, we extend flexible pricing techniques to a more general supply chain setting with nonperishable inventory. Specifically, we consider pricing, production, and distribution decisions simultaneously in a multi-period single product environment. The objective is to maximize profit under conditions of periodically varying demand, capacity, inventory holding and production costs. We show that with concave revenue curves and a polymatroid constraint set, a greedy procedure provides the optimal solution. We perform an extensive computational study that provides insights about the benefits of flexible pricing.

(Joint work with Ann Chan from the University of Toronto and Julie Swann from Northwestern University.)