( s, S ) Optimality in Joint Inventory-Pricing Control: An Alternate Approach

Woonghee Tim Huh () and Ganesh Janakiraman ()
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Woonghee Tim Huh: Department of Industrial Engineering and Operations Research, Columbia University, New York, New York 10027
Ganesh Janakiraman: Stern School of Business, New York University, New York, New York 10012

Operations Research, 2008, vol. 56, issue 3, 783-790

Abstract: We study a stationary, single-stage inventory system, under periodic review, with fixed ordering costs and multiple sales levers (such as pricing, advertising, etc.). We show the optimality of ( s, S )-type policies in these settings under both the backordering and lost-sales assumptions. Our analysis is constructive and is based on a condition that we identify as being key to proving the ( s, S ) structure. This condition is entirely based on the single-period profit function and the demand model. Our optimality results complement the existing results in this area.

Keywords: inventory/production; uncertainty; stochastic; marketing; pricing; advertising (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (38)

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