Optimal Policies for Price Sensitive Quadratic Demand with Preservation Technology Investment Under Inflationary Environment

Abstract

The proposed EOQ model is a genuine attempt to manage retailer’s inventory when retailer’s stock is comprised of defective as well as constantly deteriorating items. Defective items in inventory are managed by selling them at discounted rate after a quality check process. Deterioration of items is controlled by investing suitable amount in preservation technology. The study assumes price sensitive quadratic demand incorporating the effect of inflation leading to a realistic situation. The objective of this paper is to maximize the retailer’s total profit with respect to cycle time, selling price, and preservation technology investment. Numerical examples are given to validate the model, and sensitivity analysis of inventory parameters is done to understand their effect. The outcome of this paper is applicable to goods like utility vehicles, stationary items, Fashion accessories, Cloths, Footwears, etc.