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Two-tiered pricing and ordering for non-instantaneous deteriorating items under trade credit

Author

Listed:
  • Yu-Chung Tsao

    (National Taiwan University of Science and Technology)

  • Qinhong Zhang

    (Shanghai Jiao Tong University)

  • Hui-Ping Fang

    (National Taiwan University of Science and Technology)

  • Pei-Ling Lee

    (National Taiwan University of Science and Technology)

Abstract

We develop an economic order quantity model for non-instantaneous deteriorating items with price dependent demand and trade credit. Our objective is to determine the optimal two-tiered pricing and ordering policies, where the two-tiered pricing means that the prices for the non-deteriorating period and the deteriorating period are different. We derive the expressions of the total profit under different situations and propose an algorithm to derive the optimal solutions. Through numerical analysis, we illustrate that the two-tiered pricing is better than one-tiered pricing. Some other managerial insights are also derived by the numerical examples.

Suggested Citation

  • Yu-Chung Tsao & Qinhong Zhang & Hui-Ping Fang & Pei-Ling Lee, 2019. "Two-tiered pricing and ordering for non-instantaneous deteriorating items under trade credit," Operational Research, Springer, vol. 19(3), pages 833-852, September.
    • Handle: RePEc:spr:operea:v:19:y:2019:i:3:d:10.1007_s12351-017-0306-9
    DOI: 10.1007/s12351-017-0306-9
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    References listed on IDEAS

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