Abstract: Motivated by the two basic problems that physical retailers have to face when they plan to build the on-line channel, the inventory problems are explored.The two problems are whether the online channel uses its own stock or shares stock with the physical store to fulfill the demand from the online channel, and how to solve the channel conflicts between physical and online channels because the price of online usually is lower than physical store which may influence the demand of physical store. Also the dynamic pricing strategy is brought in to solve the channel conflicts based on previous research on dynamic stock admission policies. The relative inventory decisions are also studied by comparing the two scenarios that whether the stock is shared with physical channel or not. Furthermore the inventory pooling effect is evaluated, which is aimed at making the retailer gain the better results. The result shows that the policies of sharing the inventory with physical channel is better because of the inventory pooling effect. The dynamic pricing can make better results, and also the analysis of the structure characters of the dynamic pricing policies is carried out when the policies are tested.

Key words: dynamic pricing, stock polices, revenue management