Abstract: We consider a setting in which inventory plays both promotional and service roles; that is, higher inventories not only improve service levels but also stimulate demand by serving as a promotional tool (e.g., as the result of advertising effect by the enhanced product visibility). Specifically, we study the periodic-review inventory systems in which the demand in each period is uncertain but increases with the inventory level. We investigate the multiperiod model with normal and expediting orders in each period, that is, any shortage will be met through emergency replenishment. Such a model takes the lost sales model as a special case. For the cases without and with fixed order costs, the optimal inventory replenishment policy is shown to be of the base-stock type and of the (s, S) type, respectively.

Keywords: inventory-dependent demand; periodic-review inventory systems; optimal inventory control; (s, S) policy; emergency Orders

原文刊于《Naval Research Logistics》，59(6), 430–440, 2012. 该文被SSCI、SCI、EI同时收录。《Naval Research Logistics》是由John Wiley & Sons 发行的运营与供应链管理领域国际知名期刊之一，其5-Year Impact Factor为1.240。