Optimal dynamic pricing and replenishment policies for deteriorating items

Marketing strategies and proper inventory replenishment policies are often incorporated by enterprises to stimulate demand and maximize profit. The aim of this paper is to represent an integrated model for dynamic pricing and inventory control of deteriorating items. To reflect the dynamic characteristic of the problem, the selling price is defined as a time-dependent function of the initial selling price and the discount rate. In this regard, the price is exponentially discounted to compensate negative impact of the deterioration. The planning horizon is assumed to be infinite and the deterioration rate is time-dependent. In addition to price, the demand rate is dependent on advertisement as a powerful marketing tool. Several theoretical results and an iterative solution algorithm are developed to provide the optimal solution. Finally, to show validity of the model and illustrate the solution procedure, numerical results are presented

Temperature Monitoring for Quality Prediction and Inventory Control in Cold Chain: a Case of 18℃ Ready-to-eat Food in Taiwan

The aim of the study was the development of a quality prediction model combined with the incoming analysis for temperature control in 18 degree ready-to-eat food during logistics flows. And analyzed how temperature monitoring improves inventory decision. Base on the growth of Pseudomonas sp., the model was developed by mathematical model with Gompertz model. The model predicts for quality as well as shelf life in the monitoring temperature is about 19.5 h. On the other hand, the incoming analysis shows that the inventory quantities at 7 ℃ and 18 ℃ is more than at 25 ℃.The model can be considered to be an effective tool (in combination with temperature monitoring) for improvement of quality management with the incoming consideration. Moreover, our results suggest that temperature-controlled food companies could share temperature information with its chain partners which emphases a food quality and logistics cost balance in supply chain

An Epq Model Having Weibull Distribution Deterioration With Exponential Demand and Production With Shortages Under Permissible Delay In Payments

In the fundamental production inventory model, in order to solve the economic production quantity (EPQ) we always fix both the demand quantity and the production quantity per day. But, in the real situation, production is usually dependend on demand. This paper derives a production model for the lot-size inventory system with finite production rate, taking into consideration the effect of decay and the condition of permissible delay in payments. Usually no interest is  charged  if the outstanding amount is settled within the permitted fixed settlement period. Therefore, it makes economic sense for the customer to delay the settlement of the replenishment account up to the last moment of the permissible period allowed by the supplier. In this model shortages are permitted and fully backordered . The purpose of this paper is to investigate a computing schema for the EPQ. The model is illustrated with a numerical example. Keywords Economic production quantity, permissible delay, weibull distribution, deterioration

Pricing and inventory control policy for non-instantaneous deteriorating items with time- and price-dependent demand and partial backlogging

Determining the optimal inventory control and selling price for deteriorating items is of great significance. In this paper, a joint pricing and inventory control model for deteriorating items with price- and time-dependent demand rate and time-dependent deteriorating rate with partial backlogging is considered. The objective is to determine the optimal price, the replenishment time, and economic order quantity such that the total profit per unit time is maximized. After modeling the problem, an algorithm is proposed to solve the resulted problem. We also prove that the problem statement is concave function and the optimal solution is indeed global

Optimal Pricing Policies For Deteriorating items With Preservation Technology And Price Sensitive Demand

This paper considers the problem of determining the price, cycle time and preservation technology cost strategies for deteriorating items. It is assumed that preservation technology investment and demand rate do follow the function of selling price. The objective is to maximize the total profit per unit time with determining the optimal selling price, length of replenishment cycle and preservation technology investment. We will be proving that the optimal cycle length and selling price are unique with respect to given preservation cost. Also, total profit per unit time will be a concave function as it will reach its optimum value for optimum value of selling price, cycle length and preservation technology cost. Numerical examples are also presented to demonstrate the solution process

A two-storage model for deteriorating items with holding cost under inflation and Genetic Algorithms

A deterministic inventory model has been developed for deteriorating items and Genetic Algorithms (GA) having a ramp type demands with the effects of inflation with two-storage facilities. The owned warehouse (OW) has a fixed capacity of W units; the rented warehouse (RW) has unlimited capacity. Here, we assumed that the inventory holding cost in RW is higher than those in OW. Shortages in inventory are allowed and partially backlogged and Genetic Algorithms (GA) it is assumed that the inventory deteriorates over time at a variable deterioration rate. The effect of inflation has also been considered for various costs associated with the inventory system and Genetic Algorithms (GA). Numerical example is also used to study the behaviour of the model. Cost minimization technique is used to get the expressions for total cost and other parameters

Joint Pricing and Inventory Control for Non-instantaneous Deteriorating Items with Stochastic Demand

In recent years inventory and pricing of deteriorating items has gained an enormous attention by many researchers. In this study, an inventory system for non-instantaneous deteriorating items with stochastic demand is modeled. This model has the assumptions that shortages are allowed and backlogging rate is variable where the last one is defined as a function of waiting time for the next replenishment. The objective is to maximize the total profit per unit time by finding the optimal selling price and replenishment schedule simultaneously. The concavity of the function is proved with a unique optimal solution. Thereby we provide an algorithm for finding the optimal solution. Finally, the authors present a numerical example to illustrate the theoretical results. A sensitivity analysis for the optimal solution with respect to major parameters is also carried out

A replenishment policy for a perishable inventory system based on estimated aging and retrieval behavior

So far the literature on inventory control for perishable products has mainly focused on (near-) optimal replenishment policies for a stylized environment, assuming no leadtime, no lot-sizing, stationary demand, a first in first out retrieval policy and/or product life time equal to two periods. This literature has given fundamental insight in the behavior and the complexity of inventory systems for perishable products. In practice, many grocery retailers have recently automated the inventory replenishment for non-perishable products. They recognize they may need a different replenishment logic for perishable products, which takes into account e.g. the age of the inventory in the system. Due to new information technologies like RFID, it now also becomes more economically feasible to register this type of information. This paper suggests a replenishment policy for perishable products which takes into account the age of inventories and which requires only very simple calculations. It will be shown that in an environment, which contains important features of the real-life retail environment, this new policy leads to substantial cost reductions compared with a base policy that does not take into account the age of inventories

Retailer’s optimal pricing and ordering policies for non-instantaneous deteriorating items with price-dependent demand and partial backlogging

[[abstract]]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.[[incitationindex]]SCI[[booktype]]紙