Journal
OPERATIONS RESEARCH
Volume 58, Issue 4, Pages 1012-1016Publisher
INFORMS
DOI: 10.1287/opre.1090.0802
Keywords
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Funding
- National Science Foundation [CMMI-0653909, CMMI-0926845 ARRA]
- HK GRF [CUHK 419408]
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In this paper, we establish a new preservation property of quasi-K-concavity under certain optimization operations. One important application of the result is to analyze joint inventory-pricing models for single-product periodic-review inventory systems with concave ordering costs. At each period, an ordering quantity and a selling price of the product are determined simultaneously. Demand is random but sensitive to the price. The objective is to maximize the total expected discounted profit over a finite planning horizon. Assuming that demand is a deterministic function of the selling price plus a random perturbation with a positive Polya or uniform distribution, we show that a generalized (s, S, p) policy is optimal.
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