This paper is concerned with the determination of pricing strategies for afirm that in each period of a finite horizon receives replenishment quantitiesof a single product which it sells in two markets, e.g., a long-distance marketand an on-site market. The key difference between the two markets is that thelong-distance market provides for a one period delay in demand fulfillment. Incontrast, on-site orders must be filled immediately as the customer is at thephysical on-site location. We model the demands in consecutive periods asindependent random variables and their distributions depend on the item's pricein accordance with two general stochastic demand functions: additive ormultiplicative. The firm uses a single pool of inventory to fulfill demands from bothmarkets. We investigate properties of the structure of the dynamic pricingstrategy that maximizes the total expected discounted profit over the finitetime horizon, under fixed or controlled replenishment conditions. Further, weprovide conditions under which one market may be the preferred outlet to saleover the other.
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