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: | Arcelus F.J., Srinivasan G., Pakkala T.P.M. |
Keywords: | inventory |
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.