Article ID: | iaor20105532 |
Volume: | 40 |
Issue: | 12 |
Start Page Number: | 1273 |
End Page Number: | 1281 |
Publication Date: | Dec 2009 |
Journal: | International Journal of Systems Science |
Authors: | Ouyang Liang-Yuh, Wu Kun-Shan, Yang Chih-Te |
Keywords: | deteriorating items, pricing |
This article will formulate and solve an inventory system with non-instantaneous deteriorating items and price-sensitive demand. The purpose of this study is to determine the optimal selling price and the length of replenishment cycle such that the total profit per unit time has a maximum value for the retailer. We first establish a proper model for a mathematical formulation. Then we develop several theoretical results and provide the decision-maker with an algorithm to find the optimal solution. Finally, two numerical examples are provided to illustrate the solution procedure, and a sensitivity analysis of the optimal solution with respect to major parameters is carried out.