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A Deterministic Single-Item Inventory Model with Seller Holding Cost and Buyer Holding and Shortage Costs

Author

Listed:
  • Amihal Glazer

    (University of California, Irvine, California)

  • Refael Hassin

    (Tel Aviv University, Tel Aviv, Israel)

Abstract

This paper considers the optimal deterministic inventory policy for a monopolist. The novel element concerns the consumers. Each has a time at which he would most prefer to obtain the good; he incurs a shortage cost if he buys it after that time, and a holding cost if he obtains it before. The firm must consider that any change in its policy will affect the quantity of goods it can sell and the maximum price it can charge. We find that the seller's optimal policy can take only one of three possible forms: sell the goods throughout each cycle; sell the goods continuously during an interval that is shorter than an inventory cycle; or sell the goods only at the instant each cycle begins.

Suggested Citation

  • Amihal Glazer & Refael Hassin, 1986. "A Deterministic Single-Item Inventory Model with Seller Holding Cost and Buyer Holding and Shortage Costs," Operations Research, INFORMS, vol. 34(4), pages 613-618, August.
    • Handle: RePEc:inm:oropre:v:34:y:1986:i:4:p:613-618
    DOI: 10.1287/opre.34.4.613
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    Cited by:

    1. Hattori, Keisuke & Zennyo, Yusuke, 2018. "Heterogeneous Consumer Expectations and Monopoly Pricing for Durables with Network Externalities," MPRA Paper 89893, University Library of Munich, Germany, revised 08 Nov 2018.
    2. Ying‐Ju Chen & Leon Yang Chu, 2020. "Synchronizing pricing and replenishment to serve forward‐looking customers," Naval Research Logistics (NRL), John Wiley & Sons, vol. 67(5), pages 321-333, August.
    3. Anily, Shoshana & Hassin, Refael, 2013. "Pricing, replenishment, and timing of selling in a market with heterogeneous customers," International Journal of Production Economics, Elsevier, vol. 145(2), pages 672-682.
    4. Amihai Glazer & Refael Hassin & Irit Nowik, 2019. "How Advance Sales can Reduce Profits: When to Buy, When to Sell, and What Price to Charge," Papers 1912.02869, arXiv.org, revised Apr 2023.
    5. Arian Aflaki & Pnina Feldman & Robert Swinney, 2019. "Becoming Strategic: Endogenous Consumer Time Preferences and Multiperiod Pricing," Operations Research, INFORMS, vol. 68(4), pages 1116-1131, July.

    More about this item

    Keywords

    334 buyer holding and shortage costs;

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