Inventory policies for products with bi-level demand: optimal and heuristic algorithms
by Parag Dhumal; P.S. Sundararaghavan; Udayan Nandkeolyar
International Journal of Inventory Research (IJIR), Vol. 1, No. 3/4, 2011

Abstract: Marketing literature has long recognised price elasticity can increase the short term mean demand by as much as 400%. In this paper, we capture this behaviour of demand using a bi-level demand function and address the related inventory management problem. The seemingly simple problem turns out to be difficult to solve optimally. We present optimal and heuristic approaches. We also reformulate this problem by making price and duration as decision variables under profit maximisation environment and present calculus-based solutions.

Online publication date: Sat, 07-Mar-2015

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