Optimal pricing and lot-sizing decisions under Weibull distribution deterioration and trade credit policy
DOI:
https://doi.org/10.2298/YJOR0802221MKeywords:
retail price, lot-size, inventory managementAbstract
In this paper, we consider the problem of simultaneous determination of retail price and lot-size (RPLS) under the assumption that the supplier offers a fixed credit period to the retailer. It is assumed that the item in stock deteriorates over time at a rate that follows a two-parameter Weibull distribution and that the price-dependent demand is represented by a constant-price-elasticity function of retail price. The RPLS decision model is developed and solved analytically. Results are illustrated with the help of a base example. Computational results show that the supplier earns more profits when the credit period is greater than the replenishment cycle length. Sensitivity analysis of the solution to changes in the value of input parameters of the base example is also discussed.References
Abad, P.L. (1988) Joint price and lot-size determination when supplier offers incremental quantity discounts. Journal of the Operational Research Society, 39(6): 603
Abad, P.L. (1988) Determining optimal selling price and lot size when the supplier offers all-unit quantity discounts. Decision Sciences, 19(3): 622
Aggarwal, S.P., Jaggi, C.K. (1994) Credit financing in economic ordering policies of deteriorating items. International Journal of Production Economics, 34, 151-155
Barrotoni, J.N. (1962) Practical applications of Weibull distribution. u: ASQC Technical Conference Transactions, 303-323
Ben-Horim, M., Levy, H. (1982) Inflation and the trade credit period. Management Science, 28, 6, 646-651
Chapman, C.B., Ward, S.C., Cooper, D.F., Page, M.J. (1984) Credit policy and inventory control. Journal of the Operational Research Society, 35(12): 1055
Chung, K.H. (1989) Inventory control and trade credit revisited. J Oper Res Soc, vol. 40, 495-498
Cohen, M.A. (1977) Joint pricing and ordering policy for exponentially decaying inventory with known demand. Naval Research Logistics Quarterly, 24(2): 257
Covert, R.P., Philip, G.C. (1973) An EOQ model for items with Weibull distribution deteriorating. AIIE Transactions, vol. 5, str. 323-326
Ghare, P.M., Schrader, G.F. (1963) A model for exponentially decaying inventory. Journal of Industrial Engineering, vol. 14, str. 238-243
Goyal, S.K. (1985) Economic order quantity under conditions of permissible delay in payments. J Oper Res Soc, vol. 36, 335-338
Haley, C.W., Higgins, H.C. (1973) Inventory policy and trade credit financing. Management Science, Vol. 20, 464-471
Hariga, M.A. (1995) Lot sizing models for deteriorating items with time-dependent demand. International Journal of Systems Science, 26(12): 2391
Huang, Y.F. (2003) Optimal retailer's ordering policies in the EOQ model under trade credit financing. Journal of the Operational Research Society, 54(9): 1011
Hwang, H., Shinn, S.W. (1997) Retailer's pricing and lot sizing policy for exponentially deteriorating products under the condition of permissible delay in payments. Computers and Operations Research, vol. 24, str. 539-547
Jamal, A.M.M., Sarker, B.R., Wang, S. (2000) Optimal payment time for a retailer under permitted delay of payment by the wholesaler. International Journal of Production Economics, 66, 59-66
Kim, J.S., Hwang, H., Shinn, S.W. (1995) An optimal credit policy to increase supplier's profit with price depended demand functions. Production Planning and Control, Vol. 6, 45-50
Kingsman, B.G. (1983) The effect of payment rules on ordering and stockholding in purchasing. Journal of the Operational Research Society, 34(11): 1085
Kunreuther, H., Richard, J.F. (1971) Optimal pricing and inventory decisions for non-seasonal items. Econometrica, 39(1): 173
Kunreuther, H., Schrage, L. (1973) 'Joint pricing and inventory decisions for constant priced items. Management Science, 19(7): 732
Ladany, S., Sternlieb, A. (1974) The interaction of economic ordering quantities and marketing policies. AIIE Transactions, 6, 35-40
Lee, W.J. (1993) Determining order quantity and selling price by geometric programming: Optimal solution, bounds, and sensitivity. Decision Sciences, 24(1): 76
Ouyang, L.Y., Chang, C.T., Teng, J.T. (2005) An EOQ model for deteriorating items under trade credits. Journal of the Operational Research Society, 56(6): 719
Sarker, B.R., Jamal, A.M.M., Wang, S. (2000) Optimal payment time under permissible delay in payment for products with deterioration. Production Planning and Control, 11, 380-390
Shah, Y.K. (1991) A single-period stochastic inventory model under the influence of marketing policies. Journal of the Operational Research Society, 42(2): 173
Teng, J.T. (2002) On the economic order quantity under conditions of permissible delay in payments. J Oper Res Soc, 53, 915-918
Ward, S.C., Chapman, C.B. (1987) Inventory control and trade credit: A reply to Daellenbach. Journal of the Operational Research Society, 38(11): 1081
You, P.S. (2005) Inventory policy for products with price and time-dependent demands. Journal of the Operational Research Society, 56(7): 870
Downloads
Published
Issue
Section
License
Copyright (c) YUJOR
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
