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

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