Optimal pricing and ordering policies for retailers under order-size-dependent delay in payments

Optimal pricing and ordering policies for retailers under order-size-dependent delay in payments

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Article ID: iaor20031296
Country: United Kingdom
Volume: 30
Issue: 1
Start Page Number: 35
End Page Number: 50
Publication Date: Jan 2003
Journal: Computers and Operations Research
Authors: ,
Keywords: pricing
Abstract:

This paper deals with the problem of determining the retailer's optimal price and order size simultaneously under the condition of order-size-dependent delay in payments. It is assumed that the length of the credit period is a function of the retailer's order size, and also the demand rate is a function of the selling price. We formulate two types of mathematical models from which algorithms are derived based on properties of an optimal solution. A numerical example is presented to illustrate the algorithms developed.

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