Effects of all-units discount on pricing and replenishment policies of an inventory model under power demand pattern. Issue 1 (31st December 2023)

• Record Type: Journal Article
• Authors: Khan, Md. Al-Amin; Cárdenas-Barrón, Leopoldo Eduardo; Smith, Neale R.; Bourguet-Díaz, Rafael Ernesto; Loera-Hernández, Imelda de Jesús; Peimbert-García, Rodrigo Ernesto; Treviño-Garza, Gerardo; Céspedes-Mota, Armando
• Is Part Of: International journal of systems science. Volume 10:Issue 1(2023)
• Publication Date: 2023-12-31
• Subjects: Inventory -- profit optimisation -- price-logit and time-power multiplicative demand -- order-based all-units discount and prepayment structure; Operations research -- Periodicals; Logistics -- Periodicals; System analysis -- Periodicals; 003
• DOI: 10.1080/23302674.2022.2161712
• Languages: English
• ISSNs: 2330-2674

Abstract

Abstract : A profit optimisation inventory problem is studied for the products whose demand is interconnected with the per unit selling price and products' consumption duration as a multiplicative form of the impacts of the selling price as a logit-function and time as a power function. A reduction opportunity of the unit purchase price is offered to the retailer against an order quantity-based prepayment schedule. This study identifies when an inventory procedure is profitable or non-profitable by examining all possibilities of the optimum order quantity under an order quantity-based advance and discount scheme. Combining all the derived theoretical results, an efficacious solution algorithm is established to determine the optimal solution to the problem. Several numerical problems of businesses are solved in order to clarify the algorithm and derive results as well. Finally, the effects of the all-units discount and prepayment system on the retailer's best pricing and replenishing strategies are explored by implementing sensitivity analyses.