scholarly journals Optimal ordering policy for fast deteriorating items

2012 ◽  
Vol 6 (30) ◽  
Author(s):  
Ping-Hui Hsu
Keyword(s):  
Deteriorating Items ◽  
Ordering Policy ◽  
Optimal Ordering Policy ◽  
Optimal Ordering

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.

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