Production, inventory and waiting time

Gil S. Epstein ()

Managerial and Decision Economics, 2007, vol. 28, issue 6, pages 579-589

Abstract: In this paper, I introduce the idea of adjusting waiting time as an alternative to price adjustment in order to study the relationship between waiting time, demand, profits and inventories. In the model, demand depends on both price and waiting time. Consumers are willing to pay more if they do not have to wait long. I derive the conditions under which a monopoly may profit from utilizing the option of holding inventory by changing the waiting time facing the consumers. Copyright © 2007 John Wiley & Sons, Ltd.

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