Abstract

We address the simultaneous determination of pricing, production, and capacity investment decisions by a monopolistic firm in a multi-period setting under demand uncertainty. We analyze the optimal decision with particular emphasis on the relationship between price and capacity. We consider models that allow for either bi-directional price changes or models with markdowns only, and in the latter case we prove that capacity and price are strategic substitutes.

Authors
Gad Allon and Assaf Zeevi
Format
Journal Article
Publication Date
Journal
Production and Operations Management

Full Citation

Allon, Gad and Assaf Zeevi
. “A Note on the Relationship Among Capacity, Pricing, and Inventory in a Make-to-Stock System.”
Production and Operations Management
vol.
20
, (January 01, 2011):
143
-
151
.