IDEAS home Printed from https://ideas.repec.org/a/spr/operea/v23y2023i3d10.1007_s12351-023-00779-5.html
   My bibliography  Save this article

Optimal pricing and production lot-size policies in imperfect production system with price-sensitive demand, reworking, scrap, and sales return

Author

Listed:
  • C. K. Sivashankari

    (R.M.K. Engineering College)

  • R. Valarmathi

    (R.M.K. Engineering College)

Abstract

In this paper, optimal pricing and the production lot size in the defective production system, price-sensitive demand, reworking, scrap, and sales returns in a third-order equation are considered. However, to the best of my knowledge, no authors have developed models for optimal pricing and production lot size policies in an imperfect production system with reworking, scrap, and sales returns in a third-order equation. Two models are developed: the first model is used to assess the optimal cycle time for formulating the price-breakeven point, and the second model is used to determine the optimal price and production lot size policies with two decision variables for a single-stage imperfect production scheme. The objective here is to obtain optimum pricing and the optimal production lot size in an imperfect production system with respect to maximizing overall profit. The price-breakeven point and profit maximization are considered in the study. Furthermore, this study shows that the price per unit increases as the quantity decreases. A mathematical model is established, and a technique for identifying the best solution is developed. A numerical example is solved, and a sensitivity analysis is conducted to investigate the impact of several factors on the ideal solution. Microsoft Visual Basic 6.0 is used to code the model's outcome validation.

Suggested Citation

  • C. K. Sivashankari & R. Valarmathi, 2023. "Optimal pricing and production lot-size policies in imperfect production system with price-sensitive demand, reworking, scrap, and sales return," Operational Research, Springer, vol. 23(3), pages 1-28, September.
    • Handle: RePEc:spr:operea:v:23:y:2023:i:3:d:10.1007_s12351-023-00779-5
    DOI: 10.1007/s12351-023-00779-5
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s12351-023-00779-5
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s12351-023-00779-5?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. C. Krishnamoorthi & S. Panayappan, 2013. "An EPQ model for an imperfect production system with rework and shortages," International Journal of Operational Research, Inderscience Enterprises Ltd, vol. 17(1), pages 104-124.
    2. Yoo, Seung Ho & Kim, DaeSoo & Park, Myung-Sub, 2009. "Economic production quantity model with imperfect-quality items, two-way imperfect inspection and sales return," International Journal of Production Economics, Elsevier, vol. 121(1), pages 255-265, September.
    3. Ata Allah Taleizadeh & Leila Aliabadi & Park Thaichon, 2022. "A sustainable inventory system with price-sensitive demand and carbon emissions under partial trade credit and partial backordering," Operational Research, Springer, vol. 22(4), pages 4471-4516, September.
    4. Baruch Mor, 2023. "Single machine scheduling problems involving job-dependent step-deterioration dates and job rejection," Operational Research, Springer, vol. 23(1), pages 1-19, March.
    5. Subrata Saha & Zbigniew Banaszak & Grzegorz Bocewicz & Izabela Ewa Nielsen, 2022. "Pricing and quality competition for substitutable green products with a common retailer," Operational Research, Springer, vol. 22(4), pages 3713-3746, September.
    6. A. S. Xanthopoulos & S. Vlastos & D. E. Koulouriotis, 2022. "Coordinating production, inspection and maintenance decisions in a stochastic manufacturing system with deterioration failures," Operational Research, Springer, vol. 22(5), pages 5707-5732, November.
    7. C.K. Sivashankari, 2019. "Imperfect production system with rework of regular production with sales returns by customers and buffer stock," International Journal of Applied Management Science, Inderscience Enterprises Ltd, vol. 11(2), pages 171-183.
    8. Evan L. Porteus, 1986. "Optimal Lot Sizing, Process Quality Improvement and Setup Cost Reduction," Operations Research, INFORMS, vol. 34(1), pages 137-144, February.
    9. Xu Chen & Shuyao Wu & Xiaojun Wang & Dong Li, 2019. "Optimal pricing strategy for the perishable food supply chain," International Journal of Production Research, Taylor & Francis Journals, vol. 57(9), pages 2755-2768, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Praveendra Singh & Madhu Jain, 2024. "Inventory policy for degrading items under advanced payment with price and memory sensitive demand using metaheuristic techniques," Operational Research, Springer, vol. 24(3), pages 1-34, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Chayanika Rout & Ravi Shankar Kumar & Debjani Chakraborty & Adrijit Goswami, 2019. "An EPQ model for deteriorating items with imperfect production, inspection errors, rework and shortages : a type-2 fuzzy approach," OPSEARCH, Springer;Operational Research Society of India, vol. 56(3), pages 657-688, September.
    2. Hsu, Jia-Tzer & Hsu, Lie-Fern, 2013. "An EOQ model with imperfect quality items, inspection errors, shortage backordering, and sales returns," International Journal of Production Economics, Elsevier, vol. 143(1), pages 162-170.
    3. Sraboni Mandal & Danish Ali Khan, 2015. "Integrated inventory model with uniform demand for one vendor one customer," International Journal of Business Performance and Supply Chain Modelling, Inderscience Enterprises Ltd, vol. 7(1), pages 36-52.
    4. Harun Öztürk, 2021. "Optimal production run time for an imperfect production inventory system with rework, random breakdowns and inspection costs," Operational Research, Springer, vol. 21(1), pages 167-204, March.
    5. Ouyang, Liang-Yuh & Chang, Chun-Tao, 2013. "Optimal production lot with imperfect production process under permissible delay in payments and complete backlogging," International Journal of Production Economics, Elsevier, vol. 144(2), pages 610-617.
    6. Khan, M. & Jaber, M.Y. & Guiffrida, A.L. & Zolfaghari, S., 2011. "A review of the extensions of a modified EOQ model for imperfect quality items," International Journal of Production Economics, Elsevier, vol. 132(1), pages 1-12, July.
    7. Sudipta Sinha & Nikunja Mohan Modak & Shib Sankar Sana, 2020. "An entropic order quantity inventory model for quality assessment considering price sensitive demand," OPSEARCH, Springer;Operational Research Society of India, vol. 57(1), pages 88-103, March.
    8. Liao, Gwo-Liang & Sheu, Shey-Huei, 2011. "Economic production quantity model for randomly failing production process with minimal repair and imperfect maintenance," International Journal of Production Economics, Elsevier, vol. 130(1), pages 118-124, March.
    9. Yoo, Seung Ho & Kim, DaeSoo & Park, Myung-Sub, 2012. "Lot sizing and quality investment with quality cost analyses for imperfect production and inspection processes with commercial return," International Journal of Production Economics, Elsevier, vol. 140(2), pages 922-933.
    10. Paulson Gjerde, Kathy A. & Slotnick, Susan A., 2004. "Quality and reputation: The effects of external and internal factors over time," International Journal of Production Economics, Elsevier, vol. 89(1), pages 1-20, May.
    11. Pilar I. Vidal-Carreras & Jose P. Garcia-Sabater & Julio J. Garcia-Sabater, 2017. "A practical model for managing inventories with unknown costs and a budget constraint," International Journal of Production Research, Taylor & Francis Journals, vol. 55(1), pages 118-129, January.
    12. Freiesleben, Johannes, 2008. "A proposal for an economic quality loss function," International Journal of Production Economics, Elsevier, vol. 113(2), pages 1012-1024, June.
    13. Hofmann, Christian, 1998. "Investments in modern production technology and the cash flow-oriented EPQ-model," International Journal of Production Economics, Elsevier, vol. 54(2), pages 193-206, January.
    14. Sher, Mikhail M. & Kim, Seung-Lae & Banerjee, Avijit & Paz, Michael T., 2018. "A supply chain coordination mechanism for common items subject to failure in the electronics, defense, and medical industries," International Journal of Production Economics, Elsevier, vol. 203(C), pages 164-173.
    15. Jing Wu & Lijie Su & Gongshu Wang & Yang Yang, 2024. "Approximated Dynamic Programming for Production and Inventory Planning Problem in Cold Rolling Process of Steel Production," Mathematics, MDPI, vol. 12(24), pages 1-17, December.
    16. Tien-Yu Lin & Kuo-Lung Hou, 2015. "An imperfect quality economic order quantity with advanced receiving," TOP: An Official Journal of the Spanish Society of Statistics and Operations Research, Springer;Sociedad de Estadística e Investigación Operativa, vol. 23(2), pages 535-551, July.
    17. K-L Hou, 2005. "Optimal production run length for deteriorating production system with a two-state continuous-time Markovian processes under allowable shortages," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 56(3), pages 346-350, March.
    18. Zhang, Jianzhong & Xu, Chengxian, 2010. "Inverse optimization for linearly constrained convex separable programming problems," European Journal of Operational Research, Elsevier, vol. 200(3), pages 671-679, February.
    19. M. Jaber & Z. Givi, 2015. "Imperfect production process with learning and forgetting effects," Computational Management Science, Springer, vol. 12(1), pages 129-152, January.
    20. B. C. Giri & T Chakraborty, 2007. "Optimal production, maintenance, and warranty strategies for item sold with rebate combination warranty," Journal of Risk and Reliability, , vol. 221(4), pages 257-264, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:operea:v:23:y:2023:i:3:d:10.1007_s12351-023-00779-5. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.