Optimal sales to users who hold inventory

Amihai Glazer, Refael Hassin

Research output: Contribution to journalArticlepeer-review

Abstract

This paper solves the optimal inventory policy when both the supplier and the users can hold inventory: The supplier can hold the good until such a time as a buyer wishes to purchase it; a user can purchase a good before he needs it and hold it until the need arises, or delay the purchase and incur a shortage. The welfare-maximizing policy is shown to require periods of shortage in which no sales are made. We also show that the profit-maximizing policy will involve shorter periods of no-sales than does the welfare-maximizing policy.

Original languageEnglish
Pages (from-to)215-220
Number of pages6
JournalEconomics Letters
Volume34
Issue number3
DOIs
StatePublished - Nov 1990

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