an:05973537
Zbl 1231.90020
Chen, Xin; Zhang, Yuhan; Zhou, Sean X.
Preservation of quasi-\(K\)-concavity and its applications
EN
Oper. Res. 58, No. 4, Part 1, 1012-1016 (2010).
00280688
2010
j
90B05 90C26
inventory control; pricing; concave ordering cost; quasi-\(K\)-concavity; optimal policy
Summary: 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 P??lya or uniform distribution, we show that a generalized \((s, S, p)\) policy is optimal.