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Optimal Inventory Control and Allocation for Sequential Internet Auctions

Author

Listed:
  • Shuren Liu

    (School of Mathematics and Computational Science, Xiangtan University, Xiangtan 411105, P. R. China)

  • Yimin Zhu

    (Department of Mathematics and Science, Quzhou College, Quzhou 324000, P. R. China)

  • Qiying Hu

    (School of Management, Fudan University, Shanghai 200433, P. R. China)

Abstract

We study an optimal inventory control and allocation for a seller who uses sequential Internet auctions to sell replenishment products. This problem is faced not only by retailers/distributors in the retail industry but also by manufacturers who use sequential Internet auctions to sell products that can be replenished. We consider the total expected discounted profit criterion in a finite horizon and both the discounted and average profit criteria over an infinite horizon, and show the optimality of the so-called base-stock-allocate-all (BSAA) policies. Then, we simplify the problem of computing the optimal policies and profits for either the discounted or average profit criterion in an infinite horizon to an optimization problem with only one integer decision variable. We show these results for the list price case, and also for the case where the reserve price is a decision variable. Finally, numerical results are given, where the effects of several model parameters on the optimal policies and profits are numerically analyzed.

Suggested Citation

  • Shuren Liu & Yimin Zhu & Qiying Hu, 2015. "Optimal Inventory Control and Allocation for Sequential Internet Auctions," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 32(02), pages 1-32.
    • Handle: RePEc:wsi:apjorx:v:32:y:2015:i:02:n:s0217595915500037
    DOI: 10.1142/S0217595915500037
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    Cited by:

    1. Fuqiang Lu & Yanli Hu & Hualing Bi & Min Huang & Meng Zhao, 2018. "An Auction Approach for Cost and Schedule Management of IT Outsourcing Project," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 35(05), pages 1-23, October.
    2. Congjun Rao & Yong Zhao & Junjun Zheng & Mark Goh & Cheng Wang, 2017. "Bidding Behavior and Equilibrium Excursion of Uniform Price Auction Mechanism," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 34(06), pages 1-17, December.

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