Optimal dynamic pricing, preservation technology investment and periodic ordering policies for agricultural products

2019 ◽  
Vol 53 (3) ◽  
pp. 731-747 ◽  
Author(s):  
Jing Lu ◽  
Jianxiong Zhang ◽  
Xinyun Jia ◽  
Guowei Zhu
Keyword(s):  
Inventory Management ◽  
Dynamic Pricing ◽  
Optimal Strategies ◽  
Solution Procedure ◽  
Agricultural Products ◽  
Pricing Policy ◽  
Technology Investment ◽  
Deterioration Rate ◽  
Preservation Technology ◽  
Preservation Technology Investment

This paper focuses on the inventory management of agricultural products, a specific type of perishable items carrying the deterioration property. In practice, the deterioration rate of agricultural products is varying with time and can be slowed downviainvesting in the preservation technology. This objective of this paper is to maximize the firm’s total profit per unit time by simultaneously determining dynamic pricing, replenishment cycle length, replenishment quantity and preservation technology investment. We first derive pricing policy by solving a dynamic optimization problem and then propose a solution procedure to obtain the optimal strategies that maximize profit. Furthermore, numerical examples and sensitivity analysis are conducted to gain more managerial insights. We find that the firm should take a penetration pricing policy. In addition, if the shelf life of products is very long, the firm should not take preservation technology investment. When the unit holding cost is relatively small or the unit purchasing cost is relatively large, the firm should increase preservation technology investment.

scholarly journals Optimizing Inventory and Pricing Policy for Seasonal Deteriorating Products with Preservation Technology Investment

2013 ◽  
Vol 2013 ◽  
pp. 1-7 ◽  
Author(s):  
Yong He ◽  
Hongfu Huang
Keyword(s):  
Market Price ◽  
Optimal Solution ◽  
Solution Procedure ◽  
Pricing Policy ◽  
Technology Investment ◽  
Optimal Decisions ◽  
Deterioration Rate ◽  
Preservation Technology ◽  
Preservation Technology Investment

The paper studies a kind of deteriorating seasonal product whose deterioration rate can be controlled by investing on the preservation efforts. In contrast to previous studies, the paper considers the seasonal and deteriorating properties simultaneously. A deteriorating inventory model is developed for this problem. We also provide a solution procedure to find the optimal decisions about the preservation technology investment, the market price, and the ordering frequency. Then a case study is used to illustrate the model and the solution procedure. Finally, sensitive analysis of the optimal solution with respect to major parameters is carried out.

Setting Two-Tiered Price for Non-Instantaneous Deterioration

2018 ◽  
pp. 123-140
Author(s):  
Nita H. Shah ◽  
Urmila B. Chaudhari ◽  
Mrudul Y. Jani
Keyword(s):  
Control System ◽  
Inventory Control ◽  
Life Time ◽  
Pricing Policy ◽  
Technology Investment ◽  
Deterioration Rate ◽  
Tiered Pricing ◽  
Preservation Technology ◽  
Permissible Delay In Payment ◽  
Preservation Technology Investment

To survive in cut-throat competition of today's business, manufacture gives permissible delay in payment to retailer to increase demand of the product. Here, manufacturer provides permissible delay in payment to retailer. In this chapter, we study inventory control system of non-instantaneous deteriorating item with maximum fixed life-time and two-tiered pricing policy is adopted. The selling prices of product for the non-deteriorating period and the deteriorating period are different. Demand is a function of time and two-tiered selling prices which is more suitable for food industry. In the former, we consider the concept of preservation technology investment to preserve the product and reduce deterioration rate in the inventory system when deterioration start. In later view, we ignore the concept of preservation technology. Due to investment on preservation technology, demand of the product increases and retailer can earn more profit compare to without preservation.

scholarly journals Optimal replenishment, pricing and preservation technology investment policies for non-instantaneous deteriorating items under two-level trade credit policy

2021 ◽  
Vol 0 (0) ◽  
pp. 0
Author(s):  
Chandan Mahato ◽  
Gour Chandra Mahata
Keyword(s):  
Trade Credit ◽  
Market Competition ◽  
Deteriorating Items ◽  
Credit Policy ◽  
Business World ◽  
Credit Period ◽  
Technology Investment ◽  
Deterioration Rate ◽  
Preservation Technology ◽  
Preservation Technology Investment

<p style='text-indent:20px;'>In the business world, both the supplier and the retailer accept the credit to make their business position strong, because the credit not only strengthens their business relationships but also increases the scale of their profits. In this paper, we consider an inventory model for non-instantaneous deteriorating items with price sensitive demand, time varying deterioration rate under two-level trade credit policy. Besides, to reduce deterioration rate, retailers invest some cost to prevent product degradation/decay, known as preservation technology, is also inserted. Consumption of such items within shelf life prevents to deterioration, which can be achieved by bulk sale. In order to stimulate the selling, trade-credit policy is also considered here. In the sequel, not only the supplier would offer fixed credit period to the retailer, but retailer also adopt the trade credit policy to the customers in order to promote the market competition. The retailer can accumulate revenue and interest after the customer pays for the amount of purchasing cost to the retailer until the end of the trade credit period offered by the supplier. The main objective is to determine the optimal replenishment, pricing and preservation technology investment strategies including whether or not invest in preservation technology and how much to invest in order to maximize the average profit of the system. It is proved that the optimal replenishment policy not only exists but is unique for any given selling price and preservation technology cost. An algorithm is presented to derive the optimal solutions of the model. Numerous theorems and lemmas have been inserted to obtain the optimal solution. Finally, numerical examples and managerial implications are incorporated to validate the proposed model.</p>

Non-instantaneous deteriorating inventory model under the joined effect of trade-credit, preservation technology and advertisement policy

Kybernetes ◽  
2019 ◽  
Vol 49 (6) ◽  
pp. 1645-1674 ◽  
Author(s):  
Abu Hashan Md Mashud ◽  
Md. Rakibul Hasan ◽  
Hui Ming Wee ◽  
Yosef Daryanto
Keyword(s):  
Trade Credit ◽  
Optimization Technique ◽  
Inventory Model ◽  
Sensitivity Analyses ◽  
Selling Price ◽  
Content Type ◽  
Technology Investment ◽  
Deterioration Rate ◽  
Preservation Technology ◽  
Preservation Technology Investment

Purpose This paper aims to simultaneously consider an inventory model with price and advertisement dependent demand, non-instantaneous deterioration rate with preservation technology investment, partially backlogged shortages and trade credit. Design/methodology/approach This model considered a non-instantaneous deterioration, which starts after a certain storage period with a constant rate. The proposed model focused on two things. The first one is to reduce the deterioration rate by preservation technology investment, and the second one is using an appropriate trade credit period to maximize the total profit. The classical optimization technique is used to solve the problem. Findings The authors found that trade credit, advertising cost, preservation technology affect the total cost and selling price is one of the most important decision variables affecting the model. Practical implications This study provides a reference for a manufacturer and a retailer on making inventory decisions under different pricing, advertisement expense, preservation technology investment and credit strategies. Four cases are presented to illustrate the inventory model. Sensitivity analyses are performed to gain managerial insights for decision-making. Originality/value The study simultaneously considers a non-instantaneous deterioration inventory model, trade-credit, and preservation technology and advertisement policy. From our literature search, no researcher has undergone this type of study.

scholarly journals Preservation technology investment for an inventory system with variable deterioration rate under expiration dates and price sensitive demand

2020 ◽  
Vol 30 (3) ◽  
pp. 289-305
Author(s):  
P Priyamvada ◽  
Prerna Gautam ◽  
Aditi Khanna ◽  
Chandra Jaggi
Keyword(s):  
Sensitivity Analysis ◽  
Inventory System ◽  
Deteriorating Items ◽  
Inventory Problem ◽  
Numerical Example ◽  
Technology Investment ◽  
Deterioration Rate ◽  
Preservation Technology ◽  
Preservation Technology Investment

The proposed study addresses a supplier-retailer inventory problem by considering the detrimental impacts of deterioration. The inventory produced by the supplier undergo a machine-shift and hence, produces non-conforming items. The retailer uses the preservation technology to deal with deteriorating items ingeniously where the demand is price-sensitive at the buyers end. Two models are developed through different means viz. Integrated and Bi-level approach and compared so to impart some constructive organizational insights. Sensitivity analysis was done over a numerical example to validate strength of the developed models.

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