TECHNICAL NOTE---An Optimal Policy for Joint Dynamic Price and Lead-Time Quotation

Authors:
Jiejian Feng;Liming Liu;Xiaoming Liu
Affiliations:
School of Business, Saint Mary's University, Halifax, Nova Scotia B3H 3C3, Canada;Faculty of Business, Lingnan University, Kowloon, Hong Kong, China;Faculty of Business Administration, University of Macao, Macao, China
Venue:
Operations Research
Year:
2011

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Abstract

For a dynamic joint price and lead-time quotation problem with a fairly general demand function, we show that the policy consisting of a threshold and a reward-maximizing lead-time is optimal. This policy offers some interesting managerial insights. Under this policy, finding the exact optimal quotation can be accomplished by single-variable policy iterations of unimodal value functions.