Optimal Pricing and Ordering Policy for Deteriorating Items with Stock-and-Price Dependent Demand and Presale Rebate

Abstract

This paper considers an EOQ inventory model with presale policy for deteriorating items, in which the demand rate depends on both on-hand inventory and selling price. Under the assumption that all the presale orders are fully backlogged with waiting-time dependent rebate, this study develops several propositions and derives optimal pricing and ordering policy by designing an effective algorithm. Two numerical examples are also given to illustrate the effectiveness of the algorithm. Finally, the sensitivity analysis of the main parameters is provided.

Optimal pre-sale policy for deteriorating items

“…[27] studied an inventory model starting with shortage for Weibull-distributed deteriorating items, in which the shortage order are allowed partial backlogging. However, [28] considered an EOQ inventory model with pre-sale policy for deteriorating items, in which all the pre-sale orders are fully backlogged with waiting-time dependent rebate. [20] investigated a continuous review inventory model with order quantity, reorder point, backorder price discount, process quality, and lead time as decision variables.…”