Purchasing Speculative Inventory for Price Sensitive Demand
Ferguson, Mark E.
Ketzenberg, Michael E.
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The problem studied is one of buying and selling products cost eficiently over a number of periods in a finite horizon setting. Unit purchase costs vary across periods acording to some known distribution and demand is deterministic but dependent on the price charged for the product. Thus, the problem becomes one of exploiting opportunities to “forward buy” and sell profitably in the face of costs for carrying product.