Journal
OPERATIONS RESEARCH
Volume 60, Issue 3, Pages 581-587Publisher
INFORMS
DOI: 10.1287/opre.1120.1052
Keywords
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Funding
- Hong Kong RGC [CUHK411009]
- EPSRC [EP/F033613/1] Funding Source: UKRI
- Engineering and Physical Sciences Research Council [EP/F033613/1] Funding Source: researchfish
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We consider a joint inventory-pricing control problem for a periodic-review, single-stage inventory system with a positive order leadtime and a linear order cost. Demands in consecutive periods are independent, but their distributions depend on the price in accordance with a stochastic demand function of additive form. Pricing and ordering decisions are made simultaneously at the beginning of each period. The objective is to maximize the total expected discounted profit over a finite horizon. We partially characterize the structure of the optimal joint ordering and pricing policies. We also show that our structural analysis can be extended to a multistage (or serial) inventory system with constant or stochastic leadtimes and an assemble-to-order system with price-sensitive demand.
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