Centralized and Competitive Inventory Models with Demand Substitution

Abstract

A standard problem in operations literature is optimal stocking of substitutable products. We consider a very general consumer-driven substitution problem with an arbitrary number of products and a quite general substitution structure, both under centralized inventory management and competition. We obtain analytically tractable solutions that generalize and extend the results of several earlier papers in this area and also lead to new results.

Keywords: Newsvendor, Substitution, Stochastic, Programming, Inventory, Supply Chain