(s, S) Optimality in Joint Inventory-Pricing Control: An Alternate Approach

Woonghee Tim Huh, Ganesh Janakiraman
2008 Operations Research  
We study a stationary, single-stage inventory system, under periodic review, with fixed ordering costs and multiple sales levers (such as pricing, advertising, etc.). We show the optimality of s S -type policies in these settings under both the backordering and lost-sales assumptions. Our analysis is constructive and is based on a condition that we identify as being key to proving the s S structure. This condition is entirely based on the single-period profit function and the demand model. Our
more » ... ptimality results complement the existing results in this area.
doi:10.1287/opre.1070.0462 fatcat:7d7b3vsyazgrvlxcrqlud4ejoa