Abstract
This paper studies dynamic inventory and pricing decisions for a set of substitutable products over a flnite planning horizon. We present a general stochastic, price-dependent demand model that unifles many commonly used demand models in the literature. Unsatisfled demands are backlogged. There are linear purchasing, inventory-holding, and backordering costs. The objective is to maximize the total expected discounted proflt. The original formulation is not jointly concave in the decision variables and is therefore intractable. One key observation here is that the problem becomes jointly concave if we work with the inverse of the price vector { the market share vector. We characterize the optimal policy and develop algorithms to compute it. We establish conditions under which the optimal policy demonstrates certain monotonicity property, which, in turn, can greatly enhance computation. We also analyze the myopic policy and its optimality, and present a numerical study to illustrate the interplay of the pricing and inventory decisions.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
