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A pricing and inventory control for perishable items with the inflation rate and retailer's returns

Author

Listed:
  • Fateme Kharidar
  • Mostafa Kazemi
  • Alireza Pooya
  • Amir Mohammad Fakoor Saghih

Abstract

The impact of inflation and retail returns on perishable item joint pricing and inventory control is explored in this research, and a new model is given. The model is tested using a price and time-dependent demand function, as well as retailer's returns as a function of the selling price and order volume. The major aims of the study are to determine the optimal selling price, replenishment cycles, and order quantity all simultaneously; and to maximise the present value of the total profit over a given time horizon. Furthermore, it is displayed that the optimal replenishment cycle is unique at any price. It is then illustrated that the present value of the total profit is a concave function of price with an optimal value. Also, a simple algorithm was described for determining the optimal solution and model variables. Finally, a numerical example is used to indicate the solution algorithm, and the model's effectiveness is demonstrated by sensitivity analysis.

Suggested Citation

  • Fateme Kharidar & Mostafa Kazemi & Alireza Pooya & Amir Mohammad Fakoor Saghih, 2023. "A pricing and inventory control for perishable items with the inflation rate and retailer's returns," International Journal of Mathematics in Operational Research, Inderscience Enterprises Ltd, vol. 25(4), pages 548-569.
    • Handle: RePEc:ids:ijmore:v:25:y:2023:i:4:p:548-569
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