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Best pricing and optimal policy for an inventory system under time-and-price-dependent demand and backordering

Author

Listed:
  • Luis A. San-José

    (Universidad de Valladolid)

  • Joaquín Sicilia

    (Universidad de La Laguna)

  • Manuel González-De-la-Rosa

    (Universidad de La Laguna)

  • Jaime Febles-Acosta

    (Universidad de La Laguna)

Abstract

In this paper, we study an inventory system for products where demand depends on time and price. Shortages are allowed and are fully backordered. We suppose that the demand rate is the product of a power time pattern and a three-parametric exponential price function. The objective is to determine the economic lot size, the optimal shortage level and the best selling price to maximize the total profit per unit time. We present an efficient procedure to determine the optimal solution of the inventory problem for all possible scenarios. This procedure is illustrated with several numerical examples. A sensitivity analysis of the optimal inventory policy with respect to the parameters of the demand rate function is also given. Finally, the main contributions of this paper are highlighted and future research directions are introduced.

Suggested Citation

  • Luis A. San-José & Joaquín Sicilia & Manuel González-De-la-Rosa & Jaime Febles-Acosta, 2020. "Best pricing and optimal policy for an inventory system under time-and-price-dependent demand and backordering," Annals of Operations Research, Springer, vol. 286(1), pages 351-369, March.
    • Handle: RePEc:spr:annopr:v:286:y:2020:i:1:d:10.1007_s10479-018-2953-5
    DOI: 10.1007/s10479-018-2953-5
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    References listed on IDEAS

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    1. Joaquín Sicilia & Jaime Febles-Acosta & Manuel González-De La Rosa, 2012. "Deterministic Inventory Systems With Power Demand Pattern," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 29(05), pages 1-28.
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    Cited by:

    1. Sarkar, Biswajit & Seok, Hyesung & Jana, Tapas Kumar & Dey, Bikash Koli, 2023. "Is the system reliability profitable for retailing and consumer service of a dynamical system under cross-price elasticity of demand?," Journal of Retailing and Consumer Services, Elsevier, vol. 75(C).
    2. San-José, Luis A. & Sicilia, Joaquín & Cárdenas-Barrón, Leopoldo Eduardo & González-de-la-Rosa, Manuel, 2024. "A sustainable inventory model for deteriorating items with power demand and full backlogging under a carbon emission tax," International Journal of Production Economics, Elsevier, vol. 268(C).
    3. Khan, Md. Al-Amin & Cárdenas-Barrón, Leopoldo Eduardo & Treviño-Garza, Gerardo & Céspedes-Mota, Armando, 2023. "Installment for advance payment and pricing decisions for an inventory system under power demand pattern and all-units discount," International Journal of Production Economics, Elsevier, vol. 265(C).
    4. Luis A. San-José & Joaquín Sicilia & Manuel González-de-la-Rosa & Jaime Febles-Acosta, 2021. "Optimal Price and Lot Size for an EOQ Model with Full Backordering under Power Price and Time Dependent Demand," Mathematics, MDPI, vol. 9(16), pages 1-16, August.
    5. Herbon, Avi, 2021. "Managing an expiring product under a market that is heterogeneous in the sensitivity to the retailer's reputation," International Journal of Production Economics, Elsevier, vol. 232(C).

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