Optimal times of price reductions for an inventory model with partial backorder and vertical shift demand

Peng-Sheng You

RAIRO - Operations Research (2007)

  • Volume: 41, Issue: 1, page 35-47
  • ISSN: 0399-0559

Abstract

top
This paper investigates an inventory control problem where a firm orders and sells an inventory item through discount strategy in a price sensitive market. From the economic points of view, customers may expect a further price reduction when a firm uses pricing promotion to stimulate demand, the demand curve may vertically shift down when a firm reduces the selling price. Taking these phenomena into account, this paper developed a continuous inventory model for finding the ordering quantity, the number of pricing changing and times of price changes simultaneously so as to maximize the total profit. A solution procedure is developed for finding the optimal decision rules.

How to cite

top

You, Peng-Sheng. "Optimal times of price reductions for an inventory model with partial backorder and vertical shift demand." RAIRO - Operations Research 41.1 (2007): 35-47. <http://eudml.org/doc/250115>.

@article{You2007,
abstract = { This paper investigates an inventory control problem where a firm orders and sells an inventory item through discount strategy in a price sensitive market. From the economic points of view, customers may expect a further price reduction when a firm uses pricing promotion to stimulate demand, the demand curve may vertically shift down when a firm reduces the selling price. Taking these phenomena into account, this paper developed a continuous inventory model for finding the ordering quantity, the number of pricing changing and times of price changes simultaneously so as to maximize the total profit. A solution procedure is developed for finding the optimal decision rules. },
author = {You, Peng-Sheng},
journal = {RAIRO - Operations Research},
keywords = {Inventory; backorder; deterministic demand; multiple discounts.},
language = {eng},
month = {6},
number = {1},
pages = {35-47},
publisher = {EDP Sciences},
title = {Optimal times of price reductions for an inventory model with partial backorder and vertical shift demand},
url = {http://eudml.org/doc/250115},
volume = {41},
year = {2007},
}

TY - JOUR
AU - You, Peng-Sheng
TI - Optimal times of price reductions for an inventory model with partial backorder and vertical shift demand
JO - RAIRO - Operations Research
DA - 2007/6//
PB - EDP Sciences
VL - 41
IS - 1
SP - 35
EP - 47
AB - This paper investigates an inventory control problem where a firm orders and sells an inventory item through discount strategy in a price sensitive market. From the economic points of view, customers may expect a further price reduction when a firm uses pricing promotion to stimulate demand, the demand curve may vertically shift down when a firm reduces the selling price. Taking these phenomena into account, this paper developed a continuous inventory model for finding the ordering quantity, the number of pricing changing and times of price changes simultaneously so as to maximize the total profit. A solution procedure is developed for finding the optimal decision rules.
LA - eng
KW - Inventory; backorder; deterministic demand; multiple discounts.
UR - http://eudml.org/doc/250115
ER -

References

top
  1. M.S. Chen and M.C. Chu, The analysis of optimal price control model in matching problem between production and sales. Asia-Pacific J. Oper. Res.18 (2001) 131–148.  Zbl1042.90552
  2. H.N. Chiu, A good approximation of the inventory level in a (Q,r) perishable inventory system. RAIRO Oper. Res.33 (1999) 29–45.  Zbl0958.90001
  3. D.S. Dave, K.E. Fitzpatrick and J.R. Baker, An advertising-inclusive production lot size model under continuous discount pricing. Computers and Industrial Engineering30 (1995) 147–159.  
  4. Y. Feng and G. Gallego, Optimal stopping times for end of season sales and optimal stopping times for promotional fares. Management Science41 (1995) 1371–1391.  Zbl0859.90024
  5. Y. Feng and B. Xiao, Optimal policies of yield management with multiple predetermined prices. Oper. Res.48 (2000) 332–343.  
  6. G. Gallego and I. Moon, The distribution free newsboy problem review and extensions. J. Oper. Res. Soc.44 (1993) 825–834.  Zbl0781.90029
  7. G. Gallego and G.V. Ryzin, Optimal dynamic pricing of inventories with stochastic demand over finite horizons. Management Science40 (1994) 999–1020.  Zbl0816.90054
  8. Y. Gerchak and M. Parlar, A single period inventory problem with partially controllable demand. Comput. Oper. Res.14 (1987) 1–9.  Zbl0621.90024
  9. S. Kar, A.K. Bhunia and M. Maiti, Deterministic inventory model with two levels of storage, a linear trend in demand and a fixed time horizon. Comput. Oper. Res.28 (2001) 1315–1331.  Zbl1024.90005
  10. M. Khouja, Note on the newsboy problem with an emergency supply option. J. Oper. Res. Soc.47 (1996) 1530–1534.  Zbl0873.90022
  11. M. Khouja and A. Mehrez, A multi-product constrained newsboy problem with progressive multiple discounts. Comput. Industrial Engineering30 (1996) 95–101.  
  12. M. Khouja, The single-period (news-vendor) problem: literature review and suggestions for future research. Omega-Int. J. Management Science27 (1999) 537–553.  
  13. M. Khouja, Optimal ordering, discounting, and pricing in the single-period problem. Int. J. Production Economics65 (2000) 201–216.  
  14. M. Khouja, The newsboy problem under progressive multiple discounts. European J. Oper. Res.83 (1995) 606–614.  Zbl0909.90134
  15. A. Lau and H. Lau, The newsboy problem with price-dependent demand distribution. IIE Transactions20 (1988) 168–175.  
  16. I. Moon and S. Choi, The distribution free newsboy problem with balking. J. Oper. Res. Soc.46 (1995) 537–542.  Zbl0830.90039
  17. N.C. Petruzzi and M. Dada, Pricing and the newsvendor problem: a review with extensions. Oper. Res.47 (1999) 183–194.  Zbl1005.90546
  18. L.H. Polatoglu, Optimal order quantity and pricing decisions in single-period inventory systems. Int. J. Production Economics23 (1991) 175–185.  
  19. S.W. Shinn and H. Hwang, Optimal pricing and ordering policies for retailers under order-size-dependent delay in payments. Comput. Oper. Res.30 (2003) 35–50.  Zbl1029.90008
  20. T.L. Urban and R.C. Baker, Optimal ordering and pricing policies in a single-period environment with multivariate demand and markdowns. Eur. J. Oper. Res.103 (1997) 573–583.  Zbl0921.90065
  21. H.M. Wee, A replenishment policy for items with a price dependent demand and a varying rate of deterioration. Production Planning Control8 (1997) 494–499.  

NotesEmbed ?

top

You must be logged in to post comments.

To embed these notes on your page include the following JavaScript code on your page where you want the notes to appear.

Only the controls for the widget will be shown in your chosen language. Notes will be shown in their authored language.

Tells the widget how many notes to show per page. You can cycle through additional notes using the next and previous controls.

    
                

Note: Best practice suggests putting the JavaScript code just before the closing </body> tag.