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Optimal Investment Scheduling with Price-Sensitive Dynamic Demand


  • Donald Erlenkotter

    (University of California, Los Angeles)

  • Robert R. Trippi

    (San Diego State University)


A model is developed that integrates capital investment decisions with output and pricing decisions for a situation of growing demand. Conditions are derived for the model that permit application of a general approach for determining the optimal sequence and timing of investments in a continuous-time framework. The behavior of optimal pricing and output decisions is characterized analytically. Specific results are given for a quadratic cost and revenue case, and an example illustrates the form of a solution. Possible extensions of the model are also discussed.

Suggested Citation

  • Donald Erlenkotter & Robert R. Trippi, 1976. "Optimal Investment Scheduling with Price-Sensitive Dynamic Demand," Management Science, INFORMS, vol. 23(1), pages 1-11, September.
  • Handle: RePEc:inm:ormnsc:v:23:y:1976:i:1:p:1-11

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