TECHNICAL NOTE---A Computational Approach for Optimal Joint Inventory-Pricing Control in an Infinite-Horizon Periodic-Review System

Youyi Feng () and Youhua (Frank) Chen ()
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Youyi Feng: Department of Management Science, The City University of Hong Kong, Hong Kong; Zaragoza Logistics Center, Zaragoza, Spain
Youhua (Frank) Chen: Department of Systems Engineering and Engineering Management, The Chinese University of Hong Kong, Hong Kong

Operations Research, 2011, vol. 59, issue 5, 1297-1303

Abstract: This note considers a joint inventory-pricing control problem in an infinite-horizon periodic-review system. Demand in a period is random and depends on the posted price. Besides the holding and shortage costs, the system incurs inventory-replenishment costs that consist of both variable and fixed components. At the beginning of each period, a joint inventory and pricing decision is made. Under the long-run average profit criterion, we show that an optimal policy exists within the class of so-called ( s , S , p ) policies. This is established based on our algorithmic development, which also results in an algorithm for finding an optimal ( s , S , p ) policy.

Keywords: joint pricing and inventory control; setup cost; price dependent demand; stochastic inventory model (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (6)

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