Optimal Inventory Policies for Price and Time Sensitive Demand under Advertisement

2020 ◽  
Vol 13 ◽  
Author(s):  
Nita Shah ◽  
Ekta Patel ◽  
Kavita Rabari
Keyword(s):  
Cycle Time ◽  
Quadratic Function ◽  
Solution Procedure ◽  
Vital Role ◽  
Optimal Number ◽  
Deteriorating Items ◽  
Marginal Effect ◽  
Selling Price ◽  
Total Profit ◽  
Back Order

Aims: This article analyzes an inventory system for deteriorating items. The demand is quadratic function of time and is dependent on time, price and advertisement. Shortages are allowed and partially backlogged. Background: Demand and pricing are the two most crucial factors in inventory policy for any business to be successful. In today’s era of competitive circumstances, any product is promoted through advertisement, which plays a vital role in changing the demand pattern among the community. The marketing and demonstration of an item by time-to-time with fashionable advertisements through well-known media such as TV, radio, newspaper, magazine, etc. However, this idea is not always true for some goods like wheat, vegetables, fruits, food grains, medicines and other perishable goods due to their deteriorating nature and this in turn decreases demand for such goods. Deterioration may define as decay, damage, spoilage, evaporation, obsolescence, pilferage. Hence, deterioration effect is a major part in inventory control theory. So in this article demand rate is considered to be a function of selling price, time and occurrence of advertisement instantaneously. Objective: A solution procedure is obtained to find optimal number of price changes and optimal selling price to maximize the total profit. Method: Classical Optimization. Result: From the sensitivity analysis table, it can be seen that the optimal profit is highly sensible to advertisement coefficient and purchase cost. With an increment in rate of deterioration, selling price decreases. Scale demand has reasonable effect on cycle time and selling price. When the value of increase, the cycle length and profit goes on decreasing. Growth in profit is observed if we increase parameter b, higher will be the profit. Price elasticity is sensible parameter with respect to selling price. If backlogging rate increases, the profit will decreases. The inventory parameters holding cost, back order cost and lost sale cost have marginal effect on total profit. Conclusion: In this article, an inventory model is proposed for deteriorating items with variable demand depends upon the advertisement, selling price of the item and time. Shortages are allowed and partially backlogged and backlogging rate depends on the waiting time for the next replenishment. From this article, we can conclude that the parameters are insensible with respect to optimal profit, cycle time and selling price and rest of the parameters have practical output on total profit.

scholarly journals Joint Optimal Pricing and Inventory Control for Deteriorating Items under Inflation and Customer Returns

2013 ◽  
Vol 2013 ◽  
pp. 1-7 ◽  
Author(s):  
Maryam Ghoreishi ◽  
Alireza Arshsadi khamseh ◽  
Abolfazl Mirzazadeh
Keyword(s):  
Inventory Control ◽  
Optimal Solution ◽  
Solution Procedure ◽  
Deteriorating Items ◽  
Selling Price ◽  
Total Profit ◽  
Customer Returns ◽  
Joint Pricing ◽  
Finite Time Horizon ◽  
Dependent Demand

This paper studies the effect of inflation and customer returns on joint pricing and inventory control for deteriorating items. We adopt a price and time dependent demand function, also the customer returns are considered as a function of both price and demand. Shortage is allowed and partially backlogged. The main objective is determining the optimal selling price, the optimal replenishment cycles, and the order quantity simultaneously such that the present value of total profit in a finite time horizon is maximized. An algorithm has been presented to find the optimal solution. Finally, we solve a numerical example to illustrate the solution procedure and the algorithm.

Dynamic Pricing and Ordering Policy for Non-Instantaneous Deteriorating Items

2012 ◽  
Vol 433-440 ◽  
pp. 6607-6615
Author(s):  
Reza Maihami ◽  
Isa Nakhai Kamal Abadi
Keyword(s):  
Dynamic Pricing ◽  
Optimal Solution ◽  
Simple Algorithm ◽  
Concave Function ◽  
Deteriorating Items ◽  
Selling Price ◽  
Ordering Policy ◽  
Total Profit ◽  
Optimal Ordering Policy ◽  
Optimal Ordering

In this paper, dynamic pricing and ordering policy for non-instantaneous deteriorating items is developed. Shortage is allowed and partially backlogged where as the backlogging rate is variable and dependent on the waiting time for the next replenishment. The major objective is to determine the optimal selling price and the optimal ordering policy simultaneously such that, the total profit is maximized. We first show that for any given selling price, optimal ordering policy schedule exists and unique. Then, we show that the total profit is a concave function of price. Next, we present a simple algorithm to find the optimal solution. Finally, we solve a numerical example to illustrate the solution procedure and the algorithm.

scholarly journals Optimal pricing, ordering, and credit period policies for deteriorating products under order-linked trade credit

2021 ◽  
Vol 0 (0) ◽  
pp. 0
Author(s):  
Yu-Chung Tsao ◽  
Hanifa-Astofa Fauziah ◽  
Thuy-Linh Vu ◽  
Nur-Aini Masrurohand
Keyword(s):  
Default Risk ◽  
Global Economy ◽  
Trade Credit ◽  
Solution Procedure ◽  
Selling Price ◽  
Discounted Cash Flow ◽  
Credit Period ◽  
Total Profit ◽  
Credit Financing ◽  
Dependent Demand

<p style='text-indent:20px;'>In the modern global economy, trade credit financing is typical in business transactions for both sellers and buyers. The seller offers a credit period to attract new buyers or stimulate demand, and the buyer takes the opportunity to accumulate revenue. To obtain this benefit, the seller prefers trade credit policies that are dependent on the quantity ordered, referred to as order-linked trade credit. The buyer can obtain the benefits from a fully delayed payment if their order is sufficiently large. Similarly, the seller can sell many products while granting a credit period. Otherwise, the buyer receives only partial trade credit, and the seller can take the opportunity of both cash and credit payments. In this study, an economic order quantity (EOQ) inventory model for deteriorating products, under default risk control-based trade credit, is formulated using a discounted cash flow approach. The seller offers to the buyer order-linked trade credit with price-and credit-period-dependent demand. The optimal selling price, credit period policies, and replenishment cycle time are determined simultaneously, while maximizing the present value of the seller's total profit. Moreover, this research provides numerical examples and sensitivity analysis to illustrate the theoretical results, solution procedure, and gain managerial insights. <b>200</b> words.</p>

scholarly journals Retailer's Optimal Pricing and Ordering Policies for Non-Instantaneous Deteriorating Items with Price-Dependent Demand and Partial Backlogging

2009 ◽  
Vol 2009 ◽  
pp. 1-18 ◽  
Author(s):  
Chih-Te Yang ◽  
Liang-Yuh Ouyang ◽  
Hsing-Han Wu
Keyword(s):  
Optimal Solution ◽  
Deteriorating Items ◽  
Optimal Pricing ◽  
Selling Price ◽  
Major Objective ◽  
Maximum Value ◽  
Total Profit ◽  
Replenishment Cycle ◽  
Theoretical Results ◽  
Dependent Demand

An inventory system for non-instantaneous deteriorating items with price-dependent demand is formulated and solved. A model is developed in which shortages are allowed and partially backlogged, where the backlogging rate is variable and dependent on the waiting time for the next replenishment. The major objective is to determine the optimal selling price, the length of time in which there is no inventory shortage, and the replenishment cycle time simultaneously such that the total profit per unit time has a maximum value. An algorithm is developed to find the optimal solution, and numerical examples are provided to illustrate the theoretical results. A sensitivity analysis of the optimal solution with respect to major parameters is also carried out.

scholarly journals Pricing and Lot Sizing for Seasonal Products in Price Sensitive Environment

2013 ◽  
Vol 2013 ◽  
pp. 1-9
Author(s):  
S. Panda ◽  
S. Saha
Keyword(s):  
Lot Sizing ◽  
Optimal Solution ◽  
Solution Procedure ◽  
Fixed Number ◽  
Optimal Number ◽  
Decision Variable ◽  
Selling Price ◽  
Lot Size ◽  
Price Changes ◽  
Seasonal Products

Some seasonal products have limited sales season, and the demand of such products over the sales season is of increasing-steady-decreasing type. Customers are highly sensitive to the prices of the products. In such situation, adjustment of unit selling price is needed to accelerate inventory depletion rate and for determining order quantity for the sales season. In this paper, we focus on the issue by jointly determining optimal unit selling prices and optimal lot size over the sales season. Unlike the conventional inventory models with pricing strategy, which were restricted to prespecified pricing cycle lengths, that is, fixed number of price changes over the time horizon, we allow the number of price changes to be a decision variable. The mathematical model is developed and existence of optimal solution is verified. A solution procedure is developed to determine optimal prices, optimal number of pricing cycles, and optimal lot size. The model is illustrated by a numerical example. Sensitivity analysis of the model is also carried out.

scholarly journals An EOQ Model of Selling-Price-Dependent Demand for Non-Instantaneous Deteriorating Items during the Pandemic COVID-19

2021 ◽  
Vol 18 (12) ◽  
Author(s):  
Susanta Kumar INDRAJITSINGHA ◽  
Padmini RAULA ◽  
Padmanava SAMANTA ◽  
Umakanta MISRA ◽  
Lakshmi Kanta RAJU
Keyword(s):  
Lead Time ◽  
Graphical Representation ◽  
Dominant Role ◽  
Solution Procedure ◽  
Inventory Model ◽  
Deteriorating Items ◽  
Selling Price ◽  
Eoq Model ◽  
Optimal Ordering ◽  
Dependent Demand

A pricing factor plays a dominant role in consumer behavior in most countries affected by the COVID19 pandemic. People have lost their job while others renegotiated for low-paying jobs during this pandemic. Thus, this article aims to develop a viable model to consider various aspects of the COVID19 pandemic. Here, we develop an optimal ordering quantity inventory model of deteriorating items, which are still in demand depending upon the selling price of the product. The items are assumed to be non-instantaneous deteriorating. The shortage is allowed in lead time and is partially backlogged. A solution procedure is presented to determine an optimal cycle, order quantity, and total average cost. A realistic numerical example is given to validate the proposed model by changing different systems of parameters, where sensitivity analysis has been carried out. The effectiveness of the system has been observed through graphical representation. HIGHLIGHTS The study considers the inventory model for non-instantaneous deteriorating items. Selling price dependent demand is incorporated. The shortage is allowed in lead time and is partially backlogged. Theoretical results have been formed to characterize the optimal solutions. The effect of key parameters is studies rigorously. GRAPHICAL ABSTRACT

scholarly journals Dynamic Demand and Pricing Inventory Model for Non-Instantaneous Deteriorating Items

2021 ◽  
Vol 6 (2) ◽  
pp. 510-521
Author(s):  
Nita H. Shah ◽  
Kavita Rabari ◽  
Ekta Patel
Keyword(s):  
Discount Rate ◽  
Cycle Time ◽  
Inventory Model ◽  
Time Dependent ◽  
Selling Price ◽  
Profit Function ◽  
Dynamic Demand ◽  
Decision Variables ◽  
Total Profit ◽  
Initial Price

In this model, an inventory model for deteriorating products with dynamic demand is developed under time-dependent selling price. The selling price is supposed to be a time-dependent function of initial price of the products and the permissible discount rate at the time of deterioration. The object is sold with the constant rate in the absence of deterioration and is the exponential function of discount rate at the time; deterioration takes place. Here, the demand not only dependent on the selling price but also on the cumulative demand that represents the saturation and diffusion effect. First, an inventory model is formulated to characterize the profit function. The Classical optimization algorithm is used to solve the optimization problem. The objective is to maximize the total profit of the retailers with respect to the initial selling price and cycle time. Concavity of the objective function is discussed through graphs. At last, a sensitivity analysis is performed by changing inventory parameters and their impact on the decision variables i.e. (initial price, cycle time) together with the profit function.

Study and Analysis of GA-Based Heuristic Applied to Assembly Line Balancing Problem

2014 ◽  
Vol 13 (02) ◽  
pp. 113-131 ◽  
Author(s):  
P. Sivasankaran ◽  
P. Shahabudeen
Keyword(s):  
Cycle Time ◽  
Assembly Line ◽  
Assembly Line Balancing ◽  
Optimal Solution ◽  
Vital Role ◽  
Line Balancing ◽  
Problem Size ◽  
Minimum Number ◽  
Assembly Line Balancing Problem ◽  
Balancing Efficiency

Balancing assembly line in a mass production system plays a vital role to improve the productivity of a manufacturing system. In this paper, a single model assembly line balancing problem (SMALBP) is considered. The objective of this problem is to group the tasks in the assembly network into a minimum number of workstations for a given cycle time such that the balancing efficiency is maximized. This problem comes under combinatorial category. So, it is essential to develop efficient heuristic to find the near optimal solution of the problem in less time. In this paper, an attempt has been made to design four different genetic algorithm (GA)-based heuristics, and analyze them to select the best amongst them. The analysis has been carried out using a complete factorial experiment with three factors, viz. problem size, cycle time, and algorithm, and the results are reported.

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