A non-myopic dynamic inventory routing and pricing problem

A new framework for the design of a dynamic non-myopic inventory and delivery network between suppliers and retailers under the assumption of elastic demand-one that simultaneously incorporates inventory, routing, and pricing-is proposed. The developed queuing approximation method is based on optimal tolling of queues. We propose a dynamic approach for a supplier who has to deliver products to a number of retailers while maximizing social welfare through dynamic pricing that accounts for customer waiting times, inventory holding, lost-sales costs, and delivery costs. The proposed non-myopic model increases the social welfare by up to 17% compared to the marginal pricing case.