We introduce a measure of elasticity of stochastic demand, called the elasticity of the lost-sales rate, which offers a unifying perspective on the well-known newsvendor with pricing problem. This new concept provides a framework to characterize structural results for coordinated and uncoordinated pricing and inventory strategies. Concavity and submodularity of the profit function, as well as s...

Motivation and Research Question The plight of the record industry is well known – sales of recorded music have fallen steadily since 2000 as the growth of digital sales has not been fast enough to compensate for the decline of physical cd sales. For example, in 2007 alone physical sales fell 13% to $15.9 billion while digital sales grew by 34% to just $2.9 billion, leading to an overall 8% dec...

Because of today's strong competition, most manufacturing organizations continually try to increase their profits and reduce their costs. Accurate sales forecasting is certainly an inexpensive way to meet these goals because it leads to improved customer service, reduced lost sales and product returns, and more efficient production planning (Doganis et al., 2006). Forecasting future demand is c...

We consider a dynamic inventory (production) model with general order (production) costs and excess demand that can be backordered or refused by the rm. A unit backordered incurs a backorder cost, a unit refused incurs a lost sales charge. Endogenizing the sales decision is necessary in the presence of general convex order costs so that the rm is not forced to backorder a unit whose subsequent ...

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...

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 proof is novel, more direct and easier to understand than earlier ones. ∗Department of Industrial Enginee...