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Technical Note---Optimal Dynamic Joint Inventory-Pricing Control for Multiplicative Demand with Fixed Order Costs and Lost Sales

Author

Listed:
  • Yuyue Song

    (Faculty of Business Administration, Memorial University of Newfoundland, St. John's, Newfoundland, Canada A1B 3X5)

  • Saibal Ray

    (Desautels Faculty of Management, McGill University, Montreal, Quebec, Canada H3A 1G5)

  • Tamer Boyaci

    (Desautels Faculty of Management, McGill University, Montreal, Quebec, Canada H3A 1G5)

Abstract

This note studies the optimal dynamic decision-making problem for a retailer in a price-sensitive, multiplicative demand framework. Our model incorporates lost sales, holding cost, fixed and variable procurement costs, as well as salvage value. We characterize the structure of the retailer's (discounted) expected profit-maximizing dynamic inventory policy for both finite and infinite selling horizon problems.

Suggested Citation

  • Yuyue Song & Saibal Ray & Tamer Boyaci, 2009. "Technical Note---Optimal Dynamic Joint Inventory-Pricing Control for Multiplicative Demand with Fixed Order Costs and Lost Sales," Operations Research, INFORMS, vol. 57(1), pages 245-250, February.
    • Handle: RePEc:inm:oropre:v:57:y:2009:i:1:p:245-250
    DOI: 10.1287/opre.1080.0530
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    References listed on IDEAS

    as
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    7. Youhua (Frank) Chen & Saibal Ray & Yuyue Song, 2006. "Optimal pricing and inventory control policy in periodic‐review systems with fixed ordering cost and lost sales," Naval Research Logistics (NRL), John Wiley & Sons, vol. 53(2), pages 117-136, March.
    8. Woonghee Tim Huh & Ganesh Janakiraman, 2008. "( s, S ) Optimality in Joint Inventory-Pricing Control: An Alternate Approach," Operations Research, INFORMS, vol. 56(3), pages 783-790, June.
    Full references (including those not matched with items on IDEAS)

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