IDEAS home Printed from https://ideas.repec.org/a/wly/navlog/v22y1975i3p461-476.html
   My bibliography  Save this article

A dynamic, nonstationary inventory problem for a price/quantity setting firm

Author

Listed:
  • Gunnar T. Thowsen

Abstract

A dynamic and nonstationary model is formulated for a firm which attempts to minimize total expected costs over a finite planning horizon. The control variables are price and production. The price p and the demand ζ are linked through the relationship ζ = g(p) + η, where g(p) is the riskless demand curve and η is a random variable. The general model allows for proportional ordering costs, convex holding and stockout costs, downward sloping riskless demand curve, backlogging, partial backlogging, lost sales, partial spoilage of inventory, and two modes of collecting revenue. Sufficient conditions are developed for this problem to have an optimal policy which resembles the single critical number policy known from stochastic inventory theory. It is also shown what set of parameters will satisfy these sufficiency conditions.

Suggested Citation

  • Gunnar T. Thowsen, 1975. "A dynamic, nonstationary inventory problem for a price/quantity setting firm," Naval Research Logistics Quarterly, John Wiley & Sons, vol. 22(3), pages 461-476, September.
    • Handle: RePEc:wly:navlog:v:22:y:1975:i:3:p:461-476
    DOI: 10.1002/nav.3800220306
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/nav.3800220306
    Download Restriction: no
    File URL: https://libkey.io/10.1002/nav.3800220306?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Guoxuan Huang & Qing Ding & Ciwei Dong & Zhicong Pan, 2021. "Joint optimization of pricing and inventory control for dual-channel problem under stochastic demand," Annals of Operations Research, Springer, vol. 298(1), pages 307-337, March.
    2. Sirong Luo & Jianrong Wang, 2017. "A technical note on the dynamic nonstationary inventory-pricing control model with lost sale," International Journal of Production Research, Taylor & Francis Journals, vol. 55(19), pages 5816-5825, October.
    3. Schulte, Benedikt & Sachs, Anna-Lena, 2020. "The price-setting newsvendor with Poisson demand," European Journal of Operational Research, Elsevier, vol. 283(1), pages 125-137.
    4. Wang, Feng & Diabat, Ali & Wu, Lunwen, 2021. "Supply chain coordination with competing suppliers under price-sensitive stochastic demand," International Journal of Production Economics, Elsevier, vol. 234(C).
    5. Kaijie Zhu & Ulrich W. Thonemann, 2009. "Coordination of pricing and inventory control across products," Naval Research Logistics (NRL), John Wiley & Sons, vol. 56(2), pages 175-190, March.
    6. Wang, Qiang & Zhao, Nenggui & Wu, Jie & Zhu, Qingyuan, 2021. "Optimal pricing and inventory policies with reference price effect and loss-Averse customers," Omega, Elsevier, vol. 99(C).
    7. Qi Feng & Sirong Luo & J. George Shanthikumar, 2020. "Integrating Dynamic Pricing with Inventory Decisions Under Lost Sales," Management Science, INFORMS, vol. 66(5), pages 2232-2247, May.
    8. Lei, Zengxiang & Ukkusuri, Satish V., 2023. "Scalable reinforcement learning approaches for dynamic pricing in ride-hailing systems," Transportation Research Part B: Methodological, Elsevier, vol. 178(C).
    9. Shaban, I.A. & Wang, Z.X. & Chan, F.T.S. & Chung, S.H. & Eltoukhy, A.E.E. & Qu, T., 2019. "Price setting for extra-baggage service for a combination carrier using the newsvendor setup," Journal of Air Transport Management, Elsevier, vol. 78(C), pages 1-14.
    10. 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.
    11. Lawrence R. Weatherford, 1997. "Using Prices More Realistically as Decision Variables in Perishable-Asset Revenue Management Problems," Journal of Combinatorial Optimization, Springer, vol. 1(3), pages 277-304, October.
    12. Ruozhen Qiu & Yue Yu & Minghe Sun, 2021. "Joint pricing and stocking decisions for a newsvendor problem with loss aversion and reference point effect," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(2), pages 275-288, March.
    13. Bhatia, Nishika & Gülpınar, Nalan & Aydın, Nurşen, 2020. "Dynamic production-pricing strategies for multi-generation products under uncertainty," International Journal of Production Economics, Elsevier, vol. 230(C).
    14. Nicholas C. Petruzzi & Maqbool Dada, 2002. "Dynamic pricing and inventory control with learning," Naval Research Logistics (NRL), John Wiley & Sons, vol. 49(3), pages 303-325, April.
    15. Vasiliki Kostami, 2020. "Price and Lead time Disclosure Strategies in Inventory Systems," Production and Operations Management, Production and Operations Management Society, vol. 29(12), pages 2760-2788, December.
    16. Albert Y. Ha, 2001. "Supplier‐buyer contracting: Asymmetric cost information and cutoff level policy for buyer participation," Naval Research Logistics (NRL), John Wiley & Sons, vol. 48(1), pages 41-64, February.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:navlog:v:22:y:1975:i:3:p:461-476. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://doi.org/10.1002/(ISSN)1931-9193 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.