Technical note: A note on the structure of joint inventory-pricing control with leadtimes. (English) Zbl 1260.90023

Summary: 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.


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