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Optimal dynamic joint inventory-pricing control for multiplicative demand with fixed order costs and lost sales. (English) Zbl 1181.90024
Summary: This note studies the optimal dynamic decision-making problem for a retailer in a price-sensitive, multiplicative demand framework. Our model incorporates lost sales, holding cost, fixed and variable procurement costs, as well as salvage value. We characterize the structure of the retailer’s (discounted) expected profit-maximizing dynamic inventory policy for both finite and infinite selling horizon problems.

MSC:
90B05 Inventory, storage, reservoirs
91B24 Microeconomic theory (price theory and economic markets)
91B42 Consumer behavior, demand theory
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