Meta-Rules: Reasoning About Control

How can we insure that knowledge embedded in a program is applied effectively? Traditionally the answer to this question has been sought in different problem solving paradigms and in different approaches to encoding and indexing knowledge. Each of these is useful with a certain variety of problem, but they all share a common problem: they become ineffective in the face of a sufficiently large knowledge base. How then can we make it possible for a system to continue to function in the face of a very large number of plausibly useful chunks of knowledge? In response to this question we propose a framework for viewing issues of knowledge indexing and retrieval, a framework that includes what appears to be a useful perspective on the concept of a strategy. We view strategies as a means of controlling invocation in situations where traditional selection mechanisms become ineffective. We examine ways to effect such control, and describe meta-rules, a means of specifying strategies which offers a number of advantages. We consider at some length how and when it is useful to reason about control, and explore the advantages meta-rules offer for doing this.

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.