Abstract
ABSTRACT We consider a firm who sells a perishable item that is subject to effects of decay and fixed shelf lifetime, facing a price and stock-level dependent demand rate. We assume the firm adopts the base-stock replenishment and the first-in-first-out issuing policies. Our model is a generalized version of the previous work by considering the retail price as a decision variable and taking into account the effect of decay. The objective of the model is to jointly determine the optimal selling price, base-stock level, and inventory cycle over an infinite planning horizon so that the net profit per time unit is maximized. The profit-maximizing problem is formulated as a multivariate optimization model, solved by an iterative search process combined with an enumeration scheme. An intensive numerical study shows that the pricing scheme can be an effective mechanism in profit improvement.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callMore From: Journal of the Chinese Institute of Industrial Engineers
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
