Hostname: page-component-78c5997874-mlc7c Total loading time: 0 Render date: 2024-11-10T15:14:57.507Z Has data issue: false hasContentIssue false
  • English
  • Français

Optimal times of price reductions for an inventory model with partial backorder and vertical shift demand

Published online by Cambridge University Press:  15 June 2007

Peng-Sheng You
Peng-Sheng You*
Affiliation:
Graduate Inst. of Transportation & Logistics, National Chia-Yi University, 300 Shiue-Fu Road, Chia-Yi 600, Taiwan; psyuu@mail.ncyu.edu.tw
Get access

Abstract

This paper investigates an inventory control problem where a firm orders and sells an inventory item through discount strategy in a price sensitive market. From the economic points of view, customers may expect a further price reduction when a firm uses pricing promotion to stimulate demand, the demand curve may vertically shift down when a firm reduces the selling price. Taking these phenomena into account, this paper developed a continuous inventory model for finding the ordering quantity, the number of pricing changing and times of price changes simultaneously so as to maximize the total profit. A solution procedure is developed for finding the optimal decision rules.

Keywords

Inventorybackorderdeterministic demandmultiplediscounts.
Type
Research Article
Information
RAIRO - Operations Research , Volume 41 , Issue 1 , January 2007 , pp. 35 - 47
Copyright
© EDP Sciences, ROADEF, SMAI, 2007

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Chen, M.S. and Chu, M.C., The analysis of optimal price control model in matching problem between production and sales. Asia-Pacific J. Oper. Res. 18 (2001) 131–148.
Chiu, H.N., A good approximation of the inventory level in a (Q,r) perishable inventory system. RAIRO Oper. Res. 33 (1999) 29–45. CrossRef
Dave, D.S., Fitzpatrick, K.E. and Baker, J.R., An advertising-inclusive production lot size model under continuous discount pricing. Computers and Industrial Engineering 30 (1995) 147–159. CrossRef
Feng, Y. and Gallego, G., Optimal stopping times for end of season sales and optimal stopping times for promotional fares. Management Science 41 (1995) 1371–1391. CrossRef
Feng, Y. and Xiao, B., Optimal policies of yield management with multiple predetermined prices. Oper. Res. 48 (2000) 332–343. CrossRef
Gallego, G. and Moon, I., The distribution free newsboy problem review and extensions. J. Oper. Res. Soc. 44 (1993) 825–834. CrossRef
Gallego, G. and Ryzin, G.V., Optimal dynamic pricing of inventories with stochastic demand over finite horizons. Management Science 40 (1994) 999–1020. CrossRef
Gerchak, Y. and Parlar, M., A single period inventory problem with partially controllable demand. Comput. Oper. Res. 14 (1987) 1–9. CrossRef
Kar, S., Bhunia, A.K. and Maiti, M., Deterministic inventory model with two levels of storage, a linear trend in demand and a fixed time horizon. Comput. Oper. Res. 28 (2001) 1315–1331. CrossRef
Khouja, M., Note on the newsboy problem with an emergency supply option. J. Oper. Res. Soc. 47 (1996) 1530–1534. CrossRef
Khouja, M. and Mehrez, A., A multi-product constrained newsboy problem with progressive multiple discounts. Comput. Industrial Engineering 30 (1996) 95–101. CrossRef
Khouja, M., The single-period (news-vendor) problem: literature review and suggestions for future research. Omega-Int. J. Management Science 27 (1999) 537–553. CrossRef
Khouja, M., Optimal ordering, discounting, and pricing in the single-period problem. Int. J. Production Economics 65 (2000) 201–216. CrossRef
Khouja, M., The newsboy problem under progressive multiple discounts. European J. Oper. Res. 83 (1995) 606–614.
Lau, A. and Lau, H., The newsboy problem with price-dependent demand distribution. IIE Transactions 20 (1988) 168–175. CrossRef
Moon, I. and Choi, S., The distribution free newsboy problem with balking. J. Oper. Res. Soc. 46 (1995) 537–542. CrossRef
Petruzzi, N.C. and Pricing, M. Dada and the newsvendor problem: a review with extensions. Oper. Res. 47 (1999) 183–194. CrossRef
Polatoglu, L.H., Optimal order quantity and pricing decisions in single-period inventory systems. Int. J. Production Economics 23 (1991) 175–185.
Shinn, S.W. and Hwang, H., Optimal pricing and ordering policies for retailers under order-size-dependent delay in payments. Comput. Oper. Res. 30 (2003) 35–50. CrossRef
Urban, T.L. and Baker, R.C., Optimal ordering and pricing policies in a single-period environment with multivariate demand and markdowns. Eur. J. Oper. Res. 103 (1997) 573–583. CrossRef
Wee, H.M., A replenishment policy for items with a price dependent demand and a varying rate of deterioration. Production Planning Control 8 (1997) 494–499. CrossRef