Abstract
We consider the problem of simultaneous price determination and inventory management. Demand depends explicitly on the product price p, and the inventory control system operates under a periodic review (s, S) ordering policy. To minimize long-run average loss, we derive sample path derivatives that can be used in a gradient-based algorithm for determining the optimal values of the three parameters (s, S, p) in a simulation-based optimization procedure. Numerical results for several optimization examples are presented, and consistency proofs for the estimators are provided.
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Zhang, H., Fu, M. (2005). Sample Path Derivatives for (s, S) Inventory Systems with Price Determination. In: Golden, B., Raghavan, S., Wasil, E. (eds) The Next Wave in Computing, Optimization, and Decision Technologies. Operations Research/Computer Science Interfaces Series, vol 29. Springer, Boston, MA . https://doi.org/10.1007/0-387-23529-9_16
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DOI: https://doi.org/10.1007/0-387-23529-9_16
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