Groupe d’études et de recherche en analyse des décisions


Production, Inventories, and Pricing Under Cost and Demand Learning Effects

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We consider a monopolist firm that plans its production, inventory, and pricing policy over a fixed and finite horizon. The problem is represented by an optimal control model which combines elements from three streams of literature. The first one is a classical area within OR and deals with optimal production and inventory under exogenously given demand conditions. The second is an area of marketing science which deals with dynamic pricing under demand learning effects. Demand learning refers to the case where current demand in influenced by accumulated, past demand. The third area is one of microeconomics and industrial organization and is concerned with the effects of learning-by-doing in a firm's production process.

, 23 pages