Inventory, investment, and pricing policies for lot-size decision makers

Abstract

<p>In this dissertation, inventory, investment, and pricing policies for lot-size decision makers are examined based on classical economic order quantity. Specifically, we focus on investment in setup operations, investment in quality improvement, and market dependent products such as substitutes and complements. We examine various impacts of investment and competition on inventory policies and derive managerial insights and economic implications. Throughout this dissertation, deterministic mathematical programming is used as the primary analysis technique and optimal policies are obtained through this technique;For the inventory and investment relationships, we construct and analyze inventory and investment in setup operations policies, inventory and investment in quality improvement policies, and inventory and capital investment allocation policies in setup and quality operations under ROI maximization. The resulting contributions are the establishment of an ROI model with/without the capital budget constraint and characterization of the unique global optimal solution when there exists an option to invest in setup operations. We also show how the inventory level is reduced when it is optimal to invest additional money in setup operations and/or quality improvement;For the inventory and competition relationships, on the other hand, we design and analyze two duopoly models for two profit maximizing sellers when products are substitutes or complements. The resulting contributions are formulation of inventory and pricing policies for substitutes and complements. Furthermore, we obtain the closed-form inventory and pricing policies at equilibrium when symmetric demand and cost are assumed.</p>