A comprehensive extension of optimal ordering policy for stock‐dependent demand under progressive payment scheme

A comprehensive extension of optimal ordering policy for stock‐dependent demand under progressive payment scheme

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Article ID: iaor20117817
Volume: 215
Issue: 1
Start Page Number: 97
End Page Number: 104
Publication Date: Nov 2011
Journal: European Journal of Operational Research
Authors: , , ,
Abstract:

In a recent paper, presented an inventory model with a stock‐dependent demand under progressive payment scheme, assuming zero ending‐inventory and adopting a cost‐minimization objective. However, with a stock‐dependent demand a non‐zero ending stock may increase profits resulting from the increased demand. This work is motivated by paper extending their model to allow for: (1) a non‐zero ending‐inventory, (2) a profit‐maximization objective, (3) a limited inventory capacity and (4) deteriorating items with a constant deterioration rate. For the resulted model sufficient conditions for the existence and uniqueness of the optimal solution are provided. Finally, several economic interpretations of the theoretical results are also given.

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