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An ordering policy for deteriorating items with price-dependent iso-elastic demand under permissible delay in payments and price inflation

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  • Puspita Mahata
  • Gour Chandra Mahata
  • Avik Mukherjee

Abstract

This paper considers the problem of dynamic decision-making for an inventory model for deteriorating items under price inflation and permissible delay in payment. In this paper, we adopt an iso-elastic and selling price dependent demand function to model the finite time horizon inventory for deteriorating items. The stocks deteriorate physically at a constant fraction of the on-hand inventory. The objective of this paper is to determine the optimal retail price, number of replenishments, and the cycle time under two different credit periods so that the net profit is maximized. We discuss the optimization properties and develop an algorithm for solving the problem based on dynamic programming techniques. Numerical examples are presented to illustrate the validity of the optimal control policy, and sensitivity analysis on major parameters is performed to provide more managerial insights into deteriorating items.

Suggested Citation

  • Puspita Mahata & Gour Chandra Mahata & Avik Mukherjee, 2019. "An ordering policy for deteriorating items with price-dependent iso-elastic demand under permissible delay in payments and price inflation," Mathematical and Computer Modelling of Dynamical Systems, Taylor & Francis Journals, vol. 25(6), pages 575-601, November.
    • Handle: RePEc:taf:nmcmxx:v:25:y:2019:i:6:p:575-601
    DOI: 10.1080/13873954.2019.1677724
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    Cited by:

    1. Valentín Pando & Luis A. San-José & Joaquín Sicilia & David Alcaide-López-de-Pablo, 2021. "Profitability Index Maximization in an Inventory Model with a Price- and Stock-Dependent Demand Rate in a Power-Form," Mathematics, MDPI, vol. 9(10), pages 1-29, May.

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