A stochastic inventory control problem with reputation-dependent demand

E. Khmelnitsky, G. Singer

Research output: Chapter in Book/Report/Conference proceedingConference contributionpeer-review


The paper addresses a problem of capacitated inventory control. It incorporates the reputation of the system as a key factor influencing the distribution of future demand. The reputation depends on the degree to which past demand was satisfied. The optimality conditions developed by means of a perturbation analysis technique allow formulating some structural properties of optimal dynamics of inventory and reputation. A numerical procedure is devised to calculate an optimal rule for inventory control. The rule determines the order quantity at each time period as a function of inventory and reputation of the system at the beginning of the period. A numerical example illustrates the applicability of the developed solution method.

Original languageEnglish
Title of host publicationProceedings of the 13th IFAC Symposium on Information Control Problems in Manufacturing, INCOM'09
PublisherIFAC Secretariat
Number of pages5
Edition4 PART 1
ISBN (Print)9783902661432
StatePublished - 2009
Externally publishedYes

Publication series

NameIFAC Proceedings Volumes (IFAC-PapersOnline)
Number4 PART 1
ISSN (Print)1474-6670


  • Corporate reputation
  • Inventory control
  • Perturbation analysis
  • State-costate dynamics


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