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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.
Notes
Handled by the Department of Inventory.