Deteriorating inventory model with quantity discount, pricing and partial backordering

Abstract

Inventory models with quantity discount, pricing and partial backordering, although common in practice, have received very little attention from researchers. The objective of this study is to develop a deterministic inventory model with quantity discount, pricing and partial backordering when the product in stock deteriorates with time. Most retailers make pricing decisions of their products at certain times of the year and these decisions affect demand. In this study the demand rate is assumed to decrease as price for the product increases. Unlike traditional inventory models that seek to minimize cost, the objective of this study is to maximize profit. The findings of this study are particularly relevant to retailers of deteriorating products in a competitive environment. A numerical example is given to illustrate the theory.