A marketing decision problem in single-period stochastic inventory model

This article deals with a marketing decision problem in the classical single-period stochastic inventory model, where the level of marketing effort decides on the extent of demand. Specifically, it is assumed that mean demand is an increasing concave function of the level of marketing effort. The problem under consideration is optimal determination of both order quantity as well as level of marketing effort. Results are presented to describe the solution procedure for general demand distribution. Optimal decision rules are derived for some particular demand distributions.