Many models in operations management assume that faced with excess inventory, retailers offer price discounts to increase sales. This discount is assumed to be a certain dollar amount per unit or a certain percent of the regular price. However, many retailers use nonlinear pricing, e.g. "Buy...

Strategic inventory plays a vital role in a manufacturer-retailer dynamic contract. By holding inventories in a period, the retailer curtails the manufacturer’s pricing power in the next period and alleviates double marginalization, significantly increasing the manufacturer’s and...