Pricing and inventory control policy for non-instantaneous deteriorating items with time- and price-dependent demand and partial backlogging

Abstract

Determining the optimal inventory control and selling price for deteriorating items is of great significance. In this paper, a joint pricing and inventory control model for deteriorating items with price-and time-dependent demand rate and time-dependent deteriorating rate with partial backlogging is considered. The objective is to determine the optimal price, the replenishment time, and economic order quantity such that the total profit per unit time is maximized. After modeling the problem, an algorithm is proposed to solve the resulted problem. We also prove that the problem statement is concave function and the optimal solution is indeed global.

Pricing model for instantaneous deteriorating items with partial backlogging and different demand rates

“…Inventory dependent demand with constant rate of deterioration was considered in Tripathi and Mishra (2014) study. Farughi et al (2014) modeled the inventory system for noninstantaneous deteriorating items where demand is linear function of price and exponential function of time with constant deterioration rate. They also allowed shortages partially with back order rate in fraction form.…”

Vendor managed inventory model for non-instantaneous deteriorating product with quadratic demand allowing partial backlogging

“…While, Zhang et al (2015) developed pricing model for non-instantaneous deteriorating item by considering constant deterioration rate and stock sensitive demand. Further, Farughi et al (2014) modeled pricing and inventory control policy for non-instantaneous deteriorating items with price and time dependent demand permitting shortages with partial backlogging. Mashud et al (2018) worked on non-instantaneous deteriorating item having different demand rates allowing partial backlogging.…”

Reduce and re-use: studying retailers' food waste from an Operations Research perspective

“…Unlike many studies (e.g. Farughi et al, 2014;Liu et al, 2008;Qin et al, 2014) we did include a shift in the LEFO-FEFO ratio instead of a demand increase when applying discount. We assumed the fraction of LEFO consumers that switch to FEFO corresponds to the discount level.…”

“…Several good reviews are available such as Elmaghraby & Keskinocak (2003) and Bakker et al 2.1 indicates, most of the reviewed articles include dynamic pricing or discounting. Profit is maximized by determining the optimal price and/or optimal replenishment (policy) (Farughi et al, 2014;Rabbani et al, 2016;Zhang et al, 2015). Price determination by product quality is done by Avinadav et al (2013), (Chew et al, 2014), Qin et al (2014) and Lin et al (2016).…”

“…Existing studies on DSL do not study the effect on the replenishment strategy. The effect of discounting on the replenishment strategy is only studied in the context of FSL (Farughi et al, 2014;Lin et al, 2016;Liu et al, 2008;Qin et al, 2014). It is unknown how the replenishment strategy of a retailer will be affected when DSL or the combination of DSL and discounting is applied.…”