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Optimal pricing and replenishment schedule for deteriorating items over a finite planning horizon

Author

Listed:
  • Liang-Tu Chen
  • Jen-Ming Chen

Abstract

This paper considers a monopolistic retailer who stocks a single product that is subject to continuous decay, faces a price-dependent and time-varying demand, and has the objective of determining replenishment schedule and selling price to maximise the total profit stream over multi-period planning horizon. We propose both coordinated and decentralised decision-making policies that drive the solution of the model. The numerical result shows that the solution generated by the coordinated policy outperforms that by the decentralised policy in maximising profit and many other quantifiable measures such as minimising inventory investment and storage capacity.

Suggested Citation

  • Liang-Tu Chen & Jen-Ming Chen, 2008. "Optimal pricing and replenishment schedule for deteriorating items over a finite planning horizon," International Journal of Revenue Management, Inderscience Enterprises Ltd, vol. 2(3), pages 215-233.
    • Handle: RePEc:ids:ijrevm:v:2:y:2008:i:3:p:215-233
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