Article ID: | iaor20073202 |
Country: | France |
Volume: | 41 |
Issue: | 1 |
Start Page Number: | 35 |
End Page Number: | 47 |
Publication Date: | Jan 2007 |
Journal: | RAIRO Operations Research |
Authors: | You Peng-Sheng |
Keywords: | discounts |
This paper investigates an inventory control problem where a firm orders and sells an inventory item through discount strategy in a price sensitive market. From the economic points of view, customers may expect a further price reduction when a firm uses pricing promotion to stimulate demand, the demand curve may vertically shift down when a firm reduces the selling price. Taking these phenomena into account, this paper developed a continuous inventory model for finding the ordering quantity, the number of pricing changing and times of price changes simultaneously so as to maximize the total profit. A solution procedure is developed for finding the optimal decision rules.