Technical Note ---Preservation of Quasi- K -Concavity and Its Applications

Xin Chen (), Yuhan Zhang () and Sean X. Zhou ()
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Xin Chen: Department of Industrial and Enterprise Systems Engineering, University of Illinois at Urbana--Champaign, Urbana, Illinois 61801
Yuhan Zhang: Department of Industrial and Enterprise Systems Engineering, University of Illinois at Urbana--Champaign, Urbana, Illinois 61801
Sean X. Zhou: Department of Systems Engineering and Engineering Management, Chinese University of Hong Kong, Hong Kong

Operations Research, 2010, vol. 58, issue 4-part-1, 1012-1016

Abstract: In this paper, we establish a new preservation property of quasi- K -concavity under certain optimization operations. One important application of the result is to analyze joint inventory-pricing models for single-product periodic-review inventory systems with concave ordering costs. At each period, an ordering quantity and a selling price of the product are determined simultaneously. Demand is random but sensitive to the price. The objective is to maximize the total expected discounted profit over a finite planning horizon. Assuming that demand is a deterministic function of the selling price plus a random perturbation with a positive Pólya or uniform distribution, we show that a generalized ( s , S , p ) policy is optimal.

Keywords: inventory control; pricing; concave ordering cost; quasi-K-concavity; optimal policy (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:oropre:v:58:y:2010:i:4-part-1:p:1012-1016

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