Preservation of quasi-K-concavity and its applications

Xin Chen, Yuhan Zhang, Sean X. Zhou

Research output: Contribution to journalArticlepeer-review

Abstract

In this paper, 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 Pólya or uniform distribution, we show that a generalized (s,S,p) policy is optimal.

Original languageEnglish (US)
Pages (from-to)1012-1016
Number of pages5
JournalOperations Research
Volume58
Issue number4 PART 1
DOIs
StatePublished - Jul 1 2010

Keywords

  • Concave ordering cost
  • Inventory control
  • Optimal policy
  • Pricing
  • Quasi-K-concavity

ASJC Scopus subject areas

  • Computer Science Applications
  • Management Science and Operations Research

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