Ordering and pricing policies for random discount offerings and permissible shortages

Ordering and pricing policies for random discount offerings and permissible shortages

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Article ID: iaor20081702
Country: United Kingdom
Volume: 2
Issue: 4
Start Page Number: 400
End Page Number: 413
Publication Date: Jun 2007
Journal: International Journal of Operational Research
Authors: , ,
Keywords: inventory
Abstract:

This study develops the ordering and pricing policies of a retailer, confronted with a price-dependent demand and a vendor offering a discount on the wholesale/regular price during sales sub-periods, which are repeated randomly and last for a random amount of time. The inventory level forms a regenerative stochastic process, with regeneration points at the start of the discount sub-periods. The objective is to maximise the long run expected profit per unit time, expressed as a function of the order quantity, reorder level and retail price for regular and discount sub-periods.

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