Optimal Pricing Policies with an Allowable Discount for Perishable Items under Time-Dependent Sales Price and Trade Credit

Abstract

Trade credit is generally used by businesses to obtain external funds. This article demonstrates an inventory system from the retailer’s point of view in which (1) the influence of trade credit on expanding small businesses and their consumers is the focus of this research, and (2) the retailer’s on-hand inventory follows the non-instantaneous deterioration. (3) To maximize profit, the demand is disclosed, which is based on not just the sales price, but also on cumulative demand, which indicates saturation and diffusion. (4) The product’s initial price and the permitted discount rate at the time of deterioration are considered to be time-dependent functions of the sales price. In the absence of deterioration, the item is sold at a constant rate, and whenever deterioration occurs, the sales price is assumed to be an exponential function of the discount variable. The main aim is to optimize the total profit of the retailer in terms of cycle time and sales price. The traditional algorithm of optimization is used to address the optimization problem. Finally, the theoretical results are validated by solving three numerical illustrations and conducting a sensitivity analysis of the main factors resulting from the following managerial implications: (1) credit period provides the maximum profit margin of any financing method, and (2) an increase in the initial rate of demand raises sales price while increasing overall profit significantly.

Optimizing Pricing, Pre-Sale Incentive, and Inventory Decisions with Advance Sales and Trade Credit under Carbon Tax Policy

“…The demand is affected by the combined effect of selling price and stock age, and the deterioration rate is time-varying. Additional articles related to this topic from the last decade can be found in the works of various authors, including Li et al [36], Chung et al [37], Jani et al [38], and others. A comparison of the present paper with the relevant literature is provided in Table 1 to help the readers understand the contributions of our model.…”

“…This study endeavors to address this gap by making contributions to three streams of the literature: (1) carbon emission reduction policies, (2) advance sales and trade credit, and (3) the inventory model with price-dependent demand. EPQ V Tiwari et al [11] Production-inventory V Mishra et al [12] EPQ V Shen et al [13] Production-inventory V Cheng & Ouyang [22] EOQ V V V Cheng et al [25] EOQ V V Duary et al [26] EOQ V V V Li et al [35] EOQ V V Jani et al [38] EOQ…”

An efficient novel approach to E-commerce retail price optimization through machine learning

“…A powerful strategy is to consider the dynamic cost function of demand, where the demand varies in response to client demand. These characteristics served as the impetus for the study, which found that a dynamic pricing technique is more effective at raising revenue than adopting a fixed sales price [6]. Even if they are making losses, companies that follow this price-cultivation strategy do not decrease their product pricing to boost sales because they view such losses as investments in price development.…”