A simultaneous pricing and inventory control model for a single product with capacitated working capital

The simultaneous stochastic pricing and inventory management with capacitated cash-on-hand is a profit maximization problem faced by a firm, which has limited working capital for its liabilities. In addition to this working capital constraint, the company has to dynamically price its products and determine inventory levels to minimize its expected cost. In our study, we tackle this complicated problem by assuming a single product, periodic review inventory model with finite multiple periods, and imperfect market information. We also assume no fixed cost in order to relax the complexity of the problem and perform numerical analysis for providing managerial implications. We investigate several research questions to extend our understanding of this complicated but very practical problem faced by numerous decision-makers in organizations. A discussion of possible optimal policies for this complicated unanswered problem with working capital constraints is explored.