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An inventory model with random discount offerings

Author

Listed:
  • Mahdi Tajbakhsh, M.
  • Lee, Chi-Guhn
  • Zolfaghari, Saeed

Abstract

We consider an inventory model in which a supplier makes deal offers with random discount prices at random points in time. Assuming that discount offerings follow a Poisson process and discount price is a discrete random variable with a known distribution, we propose a continuous-review control policy for the model and derive optimality conditions for the policy parameters. The model is then extended to the case of multiple suppliers that offer discount deals with supplier-specific Poisson processes and discount prices. Numerical examples are presented to demonstrate cost savings due to discount offers.

Suggested Citation

  • Mahdi Tajbakhsh, M. & Lee, Chi-Guhn & Zolfaghari, Saeed, 2011. "An inventory model with random discount offerings," Omega, Elsevier, vol. 39(6), pages 710-718, December.
    • Handle: RePEc:eee:jomega:v:39:y:2011:i:6:p:710-718
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    References listed on IDEAS

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    1. Jing-Sheng Song & Paul Zipkin, 1993. "Inventory Control in a Fluctuating Demand Environment," Operations Research, INFORMS, vol. 41(2), pages 351-370, April.
    2. Kevin Hsu, Wen-Kai & Yu, Hong-Fwu, 2009. "EOQ model for imperfective items under a one-time-only discount," Omega, Elsevier, vol. 37(5), pages 1018-1026, October.
    3. Ramasesh, Ranga V., 2010. "Lot-sizing decisions under limited-time price incentives: A review," Omega, Elsevier, vol. 38(3-4), pages 118-135, June.
    4. Y. Feng & J. Sun, 2001. "Computing the Optimal Replenishment Policy for Inventory Systems with Random Discount Opportunities," Operations Research, INFORMS, vol. 49(5), pages 790-795, October.
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    Cited by:

    1. Ata Allah Taleizadeh & Hadi Samimi & Babak Mohammadi, 2015. "Joint replenishment policy with backordering and special sale," International Journal of Systems Science, Taylor & Francis Journals, vol. 46(7), pages 1172-1198, May.
    2. Taleizadeh, Ata Allah & Mohammadi, Babak & Cárdenas-Barrón, Leopoldo Eduardo & Samimi, Hadi, 2013. "An EOQ model for perishable product with special sale and shortage," International Journal of Production Economics, Elsevier, vol. 145(1), pages 318-338.
    3. Wang, Xiaojun & Li, Dong, 2012. "A dynamic product quality evaluation based pricing model for perishable food supply chains," Omega, Elsevier, vol. 40(6), pages 906-917.
    4. Srinivas R. Chakravarthy & B. Madhu Rao, 2021. "Queuing-Inventory Models with MAP Demands and Random Replenishment Opportunities," Mathematics, MDPI, vol. 9(10), pages 1-26, May.
    5. Pinçe, Çerağ, 2021. "Forward Buying and Strategic Stockouts," European Journal of Operational Research, Elsevier, vol. 289(1), pages 118-131.

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