Integrated vendor buyer cooperative models for deteriorating inventory with quantity discount and price sensitive stock dependent demand

Abstract

In the proposed problem, an optimal pricing and replenishment policy are discussed for a single – vendor and single – buyer. The demand is considered to be linear increasing function of stock displayed and linear decreasing function of retail price. The units in inventory are subject to constant rate of deterioration. It is observed that the joint decision is more beneficial to the vender as compared to the buyer. The quantity discount pricing is incorporated to attract the buyer to bid for the join decision. A negotiation factor is used to share the profits between vendor and buyer. Sensitivity analysis with numerical example suggests that the integrated total profit is very sensitive to the stock – dependent parameter, price-sensitive parameter and deterioration rate. It is seen that the total joint profit increases, therefore it is advantageous to opt for the joint decision with quantity discount price