Abstract
In this paper, an inventory model for deteriorating items with ramp-type time and price dependent consumption rate over a finite planning horizon is considered. In contrast to the traditional deterministic inventory model with static price over the entire planning horizon or fixed number of price changes over the finite time horizon, an alternative model is derived in which prices and the number of price change are to be decision variables. We show that the total profit function is concave. With the concavity, a solution procedure is presented to determine optimal prices, optimal number of pricing cycles and optimal lot size and optimal profit. We illustrate the model with numerical examples. Sensitivity analysis of the model is also carried out.
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