Optimal Price-Inventory Decisions: Profit vs. ROII

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Supply Chain and Inventory Management Consumer Market Behavior and Pricing Operations Management Techniques

Abstract

Making optimal price-inventory decisions in the face of alternate criteria is studied for a monopoly firm. When the firm's demand function belongs to the logarithmic concave class, necessary and sufficient optimality conditions are obtained for profit and return on inventory investment criteria. It is shown that decentralized price-inventory decision-making is optimal when the return criterion is used. The theoretical developments are elucidated with a detailed study of linear demand and a comprehensive numerical example.

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1980Pricing: Making Profitable Decisions 1955Inventory Control and Price Theory 1971Optimal Pricing and Inventory Decisions for Non-Seasonal Items 1973Joint Pricing and Inventory Decisions for Constant Priced Items 1987Inventory Policies Under Various Optimizing Criteria and Variable Markup Rates 1980Coordination Strategies for Production and Marketing in a Functionally Decentralized Firm 1976RETURN ON INVESTMENT AS A CRITERION FOR INVENTORY MODELS 1979Pricing the Product Line during Periods of Scarcity

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2016Optimal product pricing and lot sizing decisions for multiple products with nonlinear demands 2021An Inventory Model with Stock-Dependent Demand Rate and Maximization of the Return on Investment

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