Retailer’s Pricing and Lot Sizing Policy for Non Deteriorating Items with Constant Demand Rate Under the Condition of Permissible Delay in Payments

Abstract

This study develops an EOQ model for retailer’s price and lot size simultaneously when the supplier permits delay in payments for an order of a product whose demand rate is a constant price elastic function for non-deteriorating items. In this study, mathematical models have been discussed under two different situations, i.e., case I: The credit period is less than or equal to cycle time for setting the account; and case II: The credit period is greater than the cycle time for setting the account. Expressions for an inventory system’s net profit are derived for these two cases. The authors develop algorithm for a retailer to determine its optimal price and lot size simultaneously, when supplier offers a permissible in payments.