Abstract
This paper deals with an ordering-transfer policy to determine the retailer’s optimal order quantity and the number of transferred units from the warehouse to the display area. It is assumed that the amount of display space is limited and the demand rate depends on the selling price, instantaneous displayed stock level and the frequency of advertisement. The objective is to maximize the average profit per unit time yielded by the retailer. Numerical examples are presented to illustrate the model and the sensitivity analysis is also reported.
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