Coordinating Inventory Control and Pricing Strategies with Random Demand and Fixed Ordering Cost: The Finite Horizon Case

We analyze a finite horizon, single product, periodic review model in which pricing and production/inventory decisions are made simultaneously. Demands in different periods are random variables that are independent of each other and their distributions depend on the product price. Pricing and ordering decisions are made at the beginning of each period and all shortages are backlogged. Ordering cost includes both a fixed cost and a variable cost proportional to the amount ordered. The objective is to find an inventory policy and a pricing strategy maximizing expected profit over the finite horizon. We show that when the demand model is additive, the profit-to-go functions are k-concave and hence an (s,S,p) policy is optimal. In such a policy, the period inventory is managed based on the classical (s,S) policy and price is determined based on the inventory position at the beginning of each period. For more general demand functions, i.e., multiplicative plus additive functions, we demonstrate that the profit-to-go function is not necessarily k-concave and an (s,S,p) policy is not necessarily optimal. We introduce a new concept, the symmetric k-concave functions and apply it to provide a characterization of the optimal policy.

Coordinating Inventory Control and Pricing Strategies with Random Demand and Fixed Ordering Cost: the Infinite Horizon Case

We analyze an infinite horizon, single product, periodic review model in which pricing and production/inventory decisions are made simultaneously. Demands in different periods are identically distributed random variables that are independent of each other and their distributions depend on the product price. Pricing and ordering decisions are made at the beginning of each period and all shortages are backlogged. Ordering cost includes both a fixed cost and a variable cost proportional to the amount ordered. The objective is to maximize expected discounted, or expected average profit over the infinite planning horizon. We show that a stationary (s,S,p) policy is optimal for both the discounted and average profit models with general demand functions. In such a policy, the period inventory is managed based on the classical (s,S) policy and price is determined based on the inventory position at the beginning of each period.

Recognition by Prototypes

A scheme for recognizing 3D objects from single 2D images is introduced. The scheme proceeds in two stages. In the first stage, the categorization stage, the image is compared to prototype objects. For each prototype, the view that most resembles the image is recovered, and, if the view is found to be similar to the image, the class identity of the object is determined. In the second stage, the identification stage, the observed object is compared to the individual models of its class, where classes are expected to contain objects with relatively similar shapes. For each model, a view that matches the image is sought. If such a view is found, the object's specific identity is determined. The advantage of categorizing the object before it is identified is twofold. First, the image is compared to a smaller number of models, since only models that belong to the object's class need to be considered. Second, the cost of comparing the image to each model in a classis very low, because correspondence is computed once for the whoel class. More specifically, the correspondence and object pose computed in the categorization stage to align the prototype with the image are reused in the identification stage to align the individual models with the image. As a result, identification is reduced to a series fo simple template comparisons. The paper concludes with an algorithm for constructing optimal prototypes for classes of objects.