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Joint pricing and ordering policy for a deteriorating inventory with partial backlogging

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  • Dye, Chung-Yuan

Abstract

In this paper, a deterministic inventory model for deteriorating items with time-dependent backlogging rate is developed. The demand and deterioration rate are known, continuous, and differentiable function of price and time, respectively. Under these general assumptions, we first prove that the optimal replenishment schedule not only exists but is unique, for any given selling price. Next, we show that the total profit is a concave function of price when the replenishment schedule is given. We then provide a simple algorithm to find the optimal selling price and replenishment schedule for the proposed model. Finally, we use a numerical example to illustrate the algorithm.

Suggested Citation

  • Dye, Chung-Yuan, 2007. "Joint pricing and ordering policy for a deteriorating inventory with partial backlogging," Omega, Elsevier, vol. 35(2), pages 184-189, April.
    • Handle: RePEc:eee:jomega:v:35:y:2007:i:2:p:184-189
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    References listed on IDEAS

    as
    1. Wee, Hui-Ming, 1999. "Deteriorating inventory model with quantity discount, pricing and partial backordering," International Journal of Production Economics, Elsevier, vol. 59(1-3), pages 511-518, March.
    2. Papachristos, S. & Skouri, K., 2003. "An inventory model with deteriorating items, quantity discount, pricing and time-dependent partial backlogging," International Journal of Production Economics, Elsevier, vol. 83(3), pages 247-256, March.
    3. P. L. Abad, 1996. "Optimal Pricing and Lot-Sizing Under Conditions of Perishability and Partial Backordering," Management Science, INFORMS, vol. 42(8), pages 1093-1104, August.
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