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

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  • Maihami, Reza
  • Nakhai Kamalabadi, Isa

Abstract

In this paper, a joint pricing and inventory control for non-instantaneous deteriorating items is developed. We adopt a price and time dependent demand function. Shortages is allowed and partially backlogged. The major objective is to determine the optimal selling price, the optimal replenishment schedule and the optimal order quantity simultaneously such that, the total profit is maximized. We first show that for any given selling price, optimal replenishment schedule exists and unique. Then, we show that the total profit is a concave function of price. Next, we present a simple algorithm to find the optimal solution. Finally, we solve a numerical example to illustrate the solution procedure and the algorithm.

Suggested Citation

  • Maihami, Reza & Nakhai Kamalabadi, Isa, 2012. "Joint pricing and inventory control for non-instantaneous deteriorating items with partial backlogging and time and price dependent demand," International Journal of Production Economics, Elsevier, vol. 136(1), pages 116-122.
    • Handle: RePEc:eee:proeco:v:136:y:2012:i:1:p:116-122
    DOI: 10.1016/j.ijpe.2011.09.020
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    References listed on IDEAS

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    1. Wu, Kun-Shan & Ouyang, Liang-Yuh & Yang, Chih-Te, 2006. "An optimal replenishment policy for non-instantaneous deteriorating items with stock-dependent demand and partial backlogging," International Journal of Production Economics, Elsevier, vol. 101(2), pages 369-384, June.
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    4. Dye, Chung-Yuan, 2007. "Joint pricing and ordering policy for a deteriorating inventory with partial backlogging," Omega, Elsevier, vol. 35(2), pages 184-189, April.
    5. Chang, Horng-Jinh & Teng, Jinn-Tsair & Ouyang, Liang-Yuh & Dye, Chung-Yuan, 2006. "Retailer's optimal pricing and lot-sizing policies for deteriorating items with partial backlogging," European Journal of Operational Research, Elsevier, vol. 168(1), pages 51-64, January.
    6. P. L. Abad, 1996. "Optimal Pricing and Lot-Sizing Under Conditions of Perishability and Partial Backordering," Management Science, INFORMS, vol. 42(8), pages 1093-1104, August.
    7. Cai, Gangshu (George) & Chiang, Wen-Chyuan & Chen, Xiangfeng, 2011. "Game theoretic pricing and ordering decisions with partial lost sales in two-stage supply chains," International Journal of Production Economics, Elsevier, vol. 130(2), pages 175-185, April.
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