Pricing strategy in an interval-valued production inventory model for high-tech products under demand disruption and price revision

Abstract

Due to continuous development in technology, new and updated products are launching in the market more frequently in the area of some high-tech products such as smartphones, laptops, etc. It is noticed that after a certain period of releasing a new product by a particular company some other company develops a similar type of product at a lesser selling price. Customers generally become attracted to buy that updated product causing a sudden disruption in the demand for the first product. The demand for a normal product may also suddenly vanish as we have experienced during the COVID-19 lockdown period. The manufacturer is then compelled to reduce the selling price to sell the remaining products. This paper aims at developing a single period production inventory model addressing this particular market condition. This paper also considers carbon emissions from different inventory processes and examines the optimal inventory policies under the cap and trade regulatory policy. Again, in a real-life production system, the various inventory cost components and the carbon emission rates from different inventory processes are not fixed always. To incorporate this issue, the proposed model considers these quantities as interval numbers. The resulting optimization problem is thus also interval-valued and has been solved by using the quantum-behaved particle swarm optimization technique. A numerical illustration is provided to validate the proposed model. Finally, a sensitivity analysis with respect to key inventory parameters is performed to derive some key managerial implications. It is found that the frequency of launching new products is inversely proportional to the optimum profit of the manufacturer. Also, a higher carbon tax rate is found to be beneficial from an environmental point of view.