IDEAS home Printed from https://ideas.repec.org/a/ids/eujine/v6y2012i1p26-49.html
   My bibliography  Save this article

Optimal ordering policy in response to a temporary sale price when retailer's warehouse capacity is limited

Author

Listed:
  • Chih-Te Yang
  • Liang-Yuh Ouyang
  • Kun-Shan Wu
  • Hsiu-Feng Yen

Abstract

In this paper, we investigate the possible effects of a temporary price discount offered by the supplier on the retailer's replenishment policy under the premise that the capacity of the retailer-owned warehouse is limited. The purpose of this study is to develop a decision process for the retailer, which allows he/she to decide whether to adopt a special or regular order policy during a temporary sales period. For the case where a special order policy is selected, the optimal special order quantity by maximising the total cost saving between special and regular orders is determined. The model is developed when the temporary sales period coincides with one of the following: 1) the retailer's replenishment time; 2) the retailer's sales period. Furthermore, we present useful results to characterise the optimal solutions. Finally, several numerical examples are given to illustrate the theoretical results, and a sensitivity analysis of the optimal solution with respect to the main parameters is also conducted. [Received 26 September 2009; Accepted 11 July 2010].

Suggested Citation

  • Chih-Te Yang & Liang-Yuh Ouyang & Kun-Shan Wu & Hsiu-Feng Yen, 2012. "Optimal ordering policy in response to a temporary sale price when retailer's warehouse capacity is limited," European Journal of Industrial Engineering, Inderscience Enterprises Ltd, vol. 6(1), pages 26-49.
    • Handle: RePEc:ids:eujine:v:6:y:2012:i:1:p:26-49
    as

    Download full text from publisher

    File URL: http://www.inderscience.com/link.php?id=44809
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Yang, Hui-Ling, 2004. "Two-warehouse inventory models for deteriorating items with shortages under inflation," European Journal of Operational Research, Elsevier, vol. 157(2), pages 344-356, September.
    2. Sanjay Sharma, 2009. "On price increases and temporary price reductions with partial backordering," European Journal of Industrial Engineering, Inderscience Enterprises Ltd, vol. 3(1), pages 70-89.
    3. Goyal, S. K. & Giri, B. C., 2001. "Recent trends in modeling of deteriorating inventory," European Journal of Operational Research, Elsevier, vol. 134(1), pages 1-16, October.
    4. Bhavin J. Shah & Nita H. Shah & Y. K. Shah, 2005. "Eoq Model For Time-Dependent Deterioration Rate With A Temporary Price Discount," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 22(04), pages 479-485.
    5. Sarker, Bhaba R. & Al Kindi, Mahmood, 2006. "Erratum to "Optimal ordering policies in response to discount offer" [International Journal of Production Economics 100 (2006) 195-211]," International Journal of Production Economics, Elsevier, vol. 103(2), pages 895-895, October.
    6. Pakkala, T. P. M. & Achary, K. K., 1992. "A deterministic inventory model for deteriorating items with two warehouses and finite replenishment rate," European Journal of Operational Research, Elsevier, vol. 57(1), pages 71-76, February.
    7. Cárdenas-Barrón, Leopoldo Eduardo, 2009. "Optimal ordering policies in response to a discount offer: Corrections," International Journal of Production Economics, Elsevier, vol. 122(2), pages 783-789, December.
    8. Sarker, Bhaba R. & Al Kindi, Mahmood, 2006. "Optimal ordering policies in response to a discount offer," International Journal of Production Economics, Elsevier, vol. 100(2), pages 195-211, April.
    9. Ardalan, Alireza, 1995. "A comparative analysis of approaches for determining optimal price and order quantity when a sale increases demand," European Journal of Operational Research, Elsevier, vol. 84(2), pages 416-430, July.
    10. Chandra K. Jaggi & Aditi Khanna, 2009. "Retailer's ordering policy for deteriorating items with inflation-induced demand under trade credit policy," International Journal of Operational Research, Inderscience Enterprises Ltd, vol. 6(3), pages 360-379.
    11. Robert A. Davis & Norman Gaither, 1985. "Optimal Ordering Policies Under Conditions of Extended Payment Privileges," Management Science, INFORMS, vol. 31(4), pages 499-509, April.
    12. Hui-Ming Wee & Yu, Jonas, 1997. "A deteriorating inventory model with a temporary price discount," International Journal of Production Economics, Elsevier, vol. 53(1), pages 81-90, November.
    13. Cárdenas-Barrón, Leopoldo Eduardo, 2009. "Optimal ordering policies in response to a discount offer: Extensions," International Journal of Production Economics, Elsevier, vol. 122(2), pages 774-782, December.
    14. Tersine, Richard J. & Barman, Samir, 1995. "Economic purchasing strategies for temporary price discounts," European Journal of Operational Research, Elsevier, vol. 80(2), pages 328-343, January.
    15. Goyal, S. K., 1990. "Economic ordering policy during special discount periods for dynamic inventory problems under certainty," Engineering Costs and Production Economics, Elsevier, vol. 20(1), pages 101-104, July.
    16. Abad, Prakash L., 2007. "Buyer's response to a temporary price reduction incorporating freight costs," European Journal of Operational Research, Elsevier, vol. 182(3), pages 1073-1083, November.
    17. Sarma, K. V. S., 1987. "A deterministic order level inventory model for deteriorating items with two storage facilities," European Journal of Operational Research, Elsevier, vol. 29(1), pages 70-73, April.
    18. Martin, G. E., 1994. "Note on an EOQ model with a temporary sale price," International Journal of Production Economics, Elsevier, vol. 37(2-3), pages 241-243, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Shaposhnik, Yaron & Herer, Yale T. & Naseraldin, Hussein, 2015. "Optimal ordering for a probabilistic one-time discount," European Journal of Operational Research, Elsevier, vol. 244(3), pages 803-814.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. 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.
    2. 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.
    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. Chang, Horng-Jinh & Lin, Wen-Feng & Ho, Jow-Fei, 2011. "Closed-form solutions for Wee's and Martin's EOQ models with a temporary price discount," International Journal of Production Economics, Elsevier, vol. 131(2), pages 528-534, June.
    5. Yiju Wang & Hengxia Gao & Wei Xing, 2018. "Optimal replenishment and stocking strategies for inventory mechanism with a dynamically stochastic short-term price discount," Journal of Global Optimization, Springer, vol. 70(1), pages 27-53, January.
    6. Taleizadeh, Ata Allah & Pentico, David W. & Aryanezhad, Mirbahador & Ghoreyshi, Seyed Mohammad, 2012. "An economic order quantity model with partial backordering and a special sale price," European Journal of Operational Research, Elsevier, vol. 221(3), pages 571-583.
    7. Pal, Brojeswar & Sana, Shib Sankar & Chaudhuri, Kripasindhu, 2014. "Joint pricing and ordering policy for two echelon imperfect production inventory model with two cycles," International Journal of Production Economics, Elsevier, vol. 155(C), pages 229-238.
    8. Chung, Kun-Jen & Huang, Tien-Shou, 2007. "The optimal retailer's ordering policies for deteriorating items with limited storage capacity under trade credit financing," International Journal of Production Economics, Elsevier, vol. 106(1), pages 127-145, March.
    9. Hsieh, Tsu-Pang & Dye, Chung-Yuan & Ouyang, Liang-Yuh, 2008. "Determining optimal lot size for a two-warehouse system with deterioration and shortages using net present value," European Journal of Operational Research, Elsevier, vol. 191(1), pages 182-192, November.
    10. Yang, Hui-Ling, 2006. "Two-warehouse partial backlogging inventory models for deteriorating items under inflation," International Journal of Production Economics, Elsevier, vol. 103(1), pages 362-370, September.
    11. Karimi-Nasab, M. & Konstantaras, I., 2013. "An inventory control model with stochastic review interval and special sale offer," European Journal of Operational Research, Elsevier, vol. 227(1), pages 81-87.
    12. Liao, Jui-Jung & Huang, Kuo-Nan & Chung, Kun-Jen, 2012. "Lot-sizing decisions for deteriorating items with two warehouses under an order-size-dependent trade credit," International Journal of Production Economics, Elsevier, vol. 137(1), pages 102-115.
    13. Liao, Jui-Jung & Chung, Kun-Jen & Huang, Kuo-Nan, 2013. "A deterministic inventory model for deteriorating items with two warehouses and trade credit in a supply chain system," International Journal of Production Economics, Elsevier, vol. 146(2), pages 557-565.
    14. Lee, Chun Chen, 2006. "Two-warehouse inventory model with deterioration under FIFO dispatching policy," European Journal of Operational Research, Elsevier, vol. 174(2), pages 861-873, October.
    15. M. Palanivel & R. Uthayakumar, 2016. "Two-warehouse inventory model for non-instantaneous deteriorating items with partial backlogging and inflation over a finite time horizon," OPSEARCH, Springer;Operational Research Society of India, vol. 53(2), pages 278-302, June.
    16. Yu, Jonas C.P., 2019. "Optimizing a two-warehouse system under shortage backordering, trade credit, and decreasing rental conditions," International Journal of Production Economics, Elsevier, vol. 209(C), pages 147-155.
    17. Shaposhnik, Yaron & Herer, Yale T. & Naseraldin, Hussein, 2015. "Optimal ordering for a probabilistic one-time discount," European Journal of Operational Research, Elsevier, vol. 244(3), pages 803-814.
    18. Taleizadeh, Ata Allah & Zarei, Hamid Reza & Sarker, Bhaba R., 2017. "An optimal control of inventory under probablistic replenishment intervals and known price increase," European Journal of Operational Research, Elsevier, vol. 257(3), pages 777-791.
    19. Wang, X. & Li, D. & O'brien, C. & Li, Y., 2010. "A production planning model to reduce risk and improve operations management," International Journal of Production Economics, Elsevier, vol. 124(2), pages 463-474, April.
    20. 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.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ids:eujine:v:6:y:2012:i:1:p:26-49. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sarah Parker (email available below). General contact details of provider: http://www.inderscience.com/browse/index.php?journalID=210 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.