An inverse problem in estimating unknown parameters of a deterministic inventory model with price‐dependent demand

An inverse algorithm with Levenberg Marquardt method is developed in the present study to estimate the unknown parameters that were used in a deterministic inventory model for an item with price‐dependent demand from the observed inventory levels at some specific time. The inverse calculations are performed based on the simulated exact and inexact observed inventory levels to show the validity of this study, moreover, the statistical analysis is also examined here to determine the standard deviation for the estimated parameters. Results show that the standard deviation of the estimated parameters is decreased as the number of observed inventory levels is increased. Moreover, the observation times are also an important factor to the inverse solutions. Improper observed data might result in poor estimations.