Coordinated Pricing and Inventory in A System with Minimum and Maximum Production Constraints

Most inventory researches assume that the production level can be fluctuated arbitrarily. However, in many firms, large fluctuation in production levels may be very costly. This paper addresses the coordinated pricing and inventory control problem in a smoothing production system, in which the production level is constrained between-a maximum and a minimum level in each period and the price can be adjusted dynamically. We show that the optimal policy is modified-modified base stock list price policy.