Optimal pricing and production lot size policy for sustainable production inventory model for defective items with advertisement and Bertrand’s price-dependent demand

Abstract

ABSTRACT In this paper, a sustainable production inventory model for two decision variables, optimal pricing and production lot size with advertisement and price-dependent demand, is developed. This study develops sustainable production strategy for defective items produced that (1) A small proportion of manufactured goods have defectives; however, quality may be improved by investing in quality improvement cost, (2) Due to manufacturing processes and the stock of products, carbon emissions may be reduced by carbon reduction cost, (3) One of the best methods to increase the popularity of a product throughout all client categories, by using advertisement and price dependent demand. (4) The important role of the manufacturing concern is to fix the price of the product, it may be fixed by using the Price break-even point. (5) In a competitive market, the best price and production lot size are chosen using Bertrand’s competitive strategy. The objective of this work to find optimal pricing and lot size for achieving maximum profit. The price-break-even point is determined, the law of demand is verified, and the maximized profit is identified A Mathematical model is suggested to assess the optimal values for two decision variables and the analyzation of sensitivity analysis is performed using a numerical experiment.