Optimal times of price reductions for an inventory model with partial backorder and vertical shift demand
Graduate Inst. of Transportation & Logistics,
National Chia-Yi University,
300 Shiue-Fu Road, Chia-Yi 600, Taiwan;
Accepted: 7 September 2006
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.
Key words: Inventory / backorder / deterministic demand / multiple discounts.
© EDP Sciences, ROADEF, SMAI, 2007