Optimality Results in Inventory-Pricing Control: An Alternate Approach

Electronic Companion — “ s S Optimality in Joint Inventory - Pricing Control : An Alternate Approach

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

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 which we identify as being key to proving the (s, S...

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

Theorem A.1. If Condition 1 holds and K = 0, then, the optimal ordering policy for the finite horizon problem or the infinite horizon discounted profit problem has the following structure. If xt < y ∗, then order up to y∗, and set the sales lever to d∗. Otherwise, do not order. Proof. By Theorem 6.1 of Porteus (2002), it is easy to verify that (y∗,d∗) is the optimal action pair if xt < y∗. If x...

Dynamic Inventory-Pricing Control Under Backorder: Demand Estimation and Policy Optimization

Dan Zhang Leads School of Business, University of Colorado at Boulder, Boulder, CO 80309, USA [email protected] Inventory-based dynamic pricing has become a common operations strategy in practice and has received considerable attention from the research community. From an implementation perspective, it is desirable to design a simple policy like a base stock list price (BSLP) policy. The e...

Joint Pricing and Inventory Control for Seasonal and Substitutable Goods Mentioning the Symmetrical and Asymmetrical Substitution

Nowadays many well-known firms may produce similar products at different prices in order to remain in the competitive environment. The price differences may cause substitution condition which motivates the customers to substitute the similar cheaper product with an expensive one leading to an environment which is known as “customer-based price driven substitution”. This research proposes a new ...