Template-Type: ReDIF-Paper 1.0
Author-Name: van den Heuvel, W.
Author-Name-Last: van den Heuvel
Author-Name-First: Wilco
Author-Person: pva62
Author-Name: Wagelmans, A.P.M.
Author-Name-Last: Wagelmans
Author-Name-First: Albert
Title: A Polynomial Time Algorithm for a Deterministic Joint Pricing and Inventory Model
Abstract: In this paper we consider the uncapacitated economic lot-size model, where demand is a deterministic function of price. In the model a single price need to be set for all periods. The objective is to find an optimal price and ordering decisions simultaneously. In 1973 Kunreuther and Schrage proposed an heuristic algorithm to solve this problem. The contribution of our paper is twofold. First, we derive an exact algorithm to determine the optimal price and lot-sizing decisions. Moreover, we show that our algorithm boils down to solving a number of lot-sizing problems that is quadratic in the number of periods, i.e., the problem can be solved in polynomial time.
Creation-Date: 2003-09-25
File-URL: https://repub.eur.nl/pub/929/ERS-2003-065-LIS.pdf
File-Format: application/pdf
Series: RePEc:ems:eureri
Number: ERS-2003-065-LIS
Classification-JEL: L11, M, M11, R4
Keywords: inventory, lot-sizing, pricing, production
Handle: RePEc:ems:eureri:929