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An Eoq Model With Controllable Selling Rate

Author

Listed:
  • HORNG-JINH CHANG

    (Asia University, Taichung 413, Taiwan)

  • PO-YU CHEN

    (Graduate Institute of Management Sciences, Tamkang University, Taipei 251, Taiwan)

Abstract

According to the marketing principle, a decision maker may control demand rate through selling price and the unit facility cost of promoting transaction. In fact, the upper bound of willing-to-pay price and the transaction cost probably depend upon the subjective judgment of individual consumer in purchasing merchandise. This study therefore attempts to construct a bivariate distribution function to simultaneously incorporate the willing-to-pay price and the transaction cost into the classical economic order quantity (EOQ) model. Through the manipulation of the constructed bivariate distribution function, the demand function faced by the supplier can be expressed as a concrete form. The proposed mathematical model mainly concerns how to determine the initial inventory level for each business cycle, so that the profit per unit time is maximized by means of the selling price and the unit-transaction cost to control the selling rate. Furthermore, the sensitivity analysis of optimal solution is performed and the implication of this extended inventory model is also discussed.

Suggested Citation

  • Horng-Jinh Chang & Po-Yu Chen, 2008. "An Eoq Model With Controllable Selling Rate," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 25(02), pages 151-167.
    • Handle: RePEc:wsi:apjorx:v:25:y:2008:i:02:n:s0217595908001687
    DOI: 10.1142/S0217595908001687
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    Cited by:

    1. Miao-Sheng Chen & Meng-Feng Lin, 2018. "How to Make the Optimization Model for Parking Lots in Taipei," International Journal of Business and Management, Canadian Center of Science and Education, vol. 13(7), pages 262-262, June.
    2. Po-Yu Chen, 2017. "Optimal Retail Price Model for Partial Consignment to Multiple Retailers," Complexity, Hindawi, vol. 2017, pages 1-11, December.

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