The price-setting newsvendor model is used to address the single period joint pricing and
inventory control problem. The objective is to set the optimal price and replenishment quantity
of a single product in order to maximize the expected profit. Products with a short selling
season and relatively long replenishment lead times such as fashion goods are the most relevant
application areas of the model. The focus of the work is the generalization of the model with
respect to the modeling of uncertainty in demand. The author presents an analytical and
empirical study which compares different demand models with a more flexible model based on
price and inventory optimization. She concludes that using a general model can increase the
profits significantly.
