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Coordinating inventory control and pricing strategies

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dc.contributor.advisor David Simchi-Levi. en_US
dc.contributor.author Chen, Xin, 1973- en_US
dc.contributor.other Massachusetts Institute of Technology. Operations Research Center. en_US
dc.date.accessioned 2006-03-24T16:06:07Z
dc.date.available 2006-03-24T16:06:07Z
dc.date.copyright 2003 en_US
dc.date.issued 2003 en_US
dc.identifier.uri http://hdl.handle.net/1721.1/29598
dc.description Thesis (Ph. D.)--Massachusetts Institute of Technology, Sloan School of Management, Operations Research Center, 2003. en_US
dc.description Includes bibliographical references (p. 127-130). en_US
dc.description.abstract Traditional inventory models focus on effective replenishment strategies and typically assume that a commodity's price is exogenously determined. In recent years, however, a number of industries have used innovative pricing strategies to manage their inventory effectively. These developments call for models that integrate inventory control and pricing strategies. Such models are clearly important not only in the retail industry, where price-dependent demand plays an important role, but also in manufacturing environments in which production/distribution decisions can be complemented with pricing strategies to improve the firm's bottom line. To date, the literature has confined itself mainly to models with variable ordering costs but no fixed costs. Extending some of these models to include a fixed cost component is the main focus of this thesis. In this thesis, we start by analyzing a single product, periodic review joint inventory control and pricing model, and characterizing the structure of the optimal policy under various conditions. Specifically, for the finite horizon periodic review case, we show, by employing the classical k-convexity concept, that a simple policy, called (s, S, p), is optimal when the demand functions are additive. For the model with more general demand functions, we show that an (s, S, p) policy is not necessarily optimal. We introduce a new concept, the symmetric k-convex functions, and apply it to provide a characterization of the optimal policy. Surprisingly, in the infinite horizon periodic review case, the concept of symmetric k-convex functions allows us to show that a stationary (s, S, p) policy is optimal for both discounted and average profit models even for general demand functions. en_US
dc.description.abstract (cont.) Our approach developed for the infinite horizon periodic review joint inventory control and pricing problem is then extended to a corresponding continuous review model. In this case, we prove that a stationary (s, S, p) policy is optimal under fairly general assumptions. Finally, the symmetric k-convexity concept developed in this thesis is employed to characterize the optimal policy for the stochastic cash balance problem. en_US
dc.description.statementofresponsibility by Xin Chen. en_US
dc.format.extent 130 p. en_US
dc.format.extent 4681613 bytes
dc.format.extent 11253395 bytes
dc.format.mimetype application/pdf
dc.format.mimetype application/pdf
dc.language.iso eng en_US
dc.publisher Massachusetts Institute of Technology en_US
dc.rights M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission. en_US
dc.rights.uri http://dspace.mit.edu/handle/1721.1/7582
dc.subject Operations Research Center. en_US
dc.title Coordinating inventory control and pricing strategies en_US
dc.type Thesis en_US
dc.description.degree Ph.D. en_US
dc.contributor.department Massachusetts Institute of Technology. Operations Research Center. en_US
dc.identifier.oclc 53010403 en_US


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