Coordinating replenishment and pricing policies for non-instantaneous deteriorating items with price-sensitive demand

Coordinating replenishment and pricing policies for non-instantaneous deteriorating items with price-sensitive demand

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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: , ,
Keywords: deteriorating items, pricing
Abstract:

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.

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