Base stock list price policy in continuous time

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review

1 Scopus Citations
View graph of relations

Author(s)

Detail(s)

Original languageEnglish
Pages (from-to)1-28
Journal / PublicationDiscrete and Continuous Dynamical Systems - Series B
Volume22
Issue number1
Publication statusPublished - 1 Jan 2017

Abstract

We study the problem of inventory control, with simultaneous pricing optimization in continuous time. For the classical inventory control problem in continuous time, see [5], as a recent reference. We incorporate pricing decisions together with inventory decisions. We consider the situation without fixed cost for an infinite horizon. Without pricing, under very natural assumptions, the optimal ordering policy is given by a Base stock, which we review briefly. With pricing, the natural generalization is the so called "Base Stock list price" (BSLP) term coined by E. Porteus, see [26], and was shown in discrete time by A. Federgruen and A. Herching to be the optimal strategy, see [14]. We extend the concept to continuous time which not only complicates the dynamics of the problem, which has never been considered before.

Research Area(s)

  • Base stock list price, Continuous time, Quasi-variational inequalities, Stochastic dynamic programming, Stochastic inventory control