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Joint pricing, advertisement, preservation technology investment and inventory policies for non-instantaneous deteriorating items under trade credit

Author

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  • Chaitanyakumar N. Rapolu

    (The Maharaja Sayajirao University of Baroda)

  • Deepa H. Kandpal

    (The Maharaja Sayajirao University of Baroda)

Abstract

To maximize profit in a competitive market environment, for retailers, it became necessary to optimize preservation, pricing, and marketing strategies together with inventory ordering policies. This study deals with the problem of optimizing price, advertisement frequency, preservation technology (PT) investment and ordering policies simultaneously for non-instantaneous deteriorating items whose deterioration rate can be reduced by investing in PT, while demand depends on both selling price and frequency of advertisement. The supplier allows some credit period to settle the account, and under this policy, three possible cases considered separately. We adopt three-parameter Weibull distribution deterioration and partial backlogs of shortages in a general framework to formulate the model. An iterative algorithm is provided to obtain the optimal solution, then the proposed model is illustrated through numerical examples. The concavity of the total profit function with respect to decision variables shown graphically. Sensitivity analysis has been conducted to investigate the impact of each parameter. PT investment and credit period are beneficial for the retailer, and also can earn more profit through advertisement. Value-added food products, such as bottled fruit juice, soft drinks, packed fruits, bread, cake, processed meat, etc., needs preservation technology and their demand depends on the price as well as marketing. Profit maximization of such items can be studied with the help of new model developed in this paper.

Suggested Citation

  • Chaitanyakumar N. Rapolu & Deepa H. Kandpal, 2020. "Joint pricing, advertisement, preservation technology investment and inventory policies for non-instantaneous deteriorating items under trade credit," OPSEARCH, Springer;Operational Research Society of India, vol. 57(2), pages 274-300, June.
    • Handle: RePEc:spr:opsear:v:57:y:2020:i:2:d:10.1007_s12597-019-00427-7
    DOI: 10.1007/s12597-019-00427-7
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    References listed on IDEAS

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    Cited by:

    1. Mrudul Y. Jani & Heta A. Patel & Amrita Bhadoriya & Urmila Chaudhari & Mohamed Abbas & Malak S. Alqahtani, 2023. "Deterioration Control Decision Support System for the Retailer during Availability of Trade Credit and Shortages," Mathematics, MDPI, vol. 11(3), pages 1-27, January.
    2. R. Sundararajan & M. Palanivel & S. Vaithyasubramanian, 2023. "On the EOQ Models with Advertisement-Price-Dependent Demand and Quantity Discount with Expiration Date Under Shortage," SN Operations Research Forum, Springer, vol. 4(4), pages 1-31, December.
    3. Hailemariam Gebru & Baba Abdissa & Betelhem Addis & Sisay Alebachew & Abaysew Ayele, 2023. "Selection of conventional preservation technologies using analytical hierarchy process," OPSEARCH, Springer;Operational Research Society of India, vol. 60(1), pages 217-233, March.
    4. Nita H. Shah & Pratik H. Shah & Milan B. Patel, 2021. "Retailer’s inventory decisions with promotional efforts and preservation technology investments when supplier offers quantity discounts," OPSEARCH, Springer;Operational Research Society of India, vol. 58(4), pages 1116-1132, December.
    5. Gaurav Nagpal & Udayan Chanda & Himanshu Seth & Namita Ruparel, 2022. "Inventory Replenishment Policies for Two Successive Generations of Technology Products Under Permissible Delay in Payments," International Journal of Information Systems and Supply Chain Management (IJISSCM), IGI Global, vol. 15(1), pages 1-29, January.
    6. Ajoy Hatibaruah & Sumit Saha, 2023. "An inventory model for two-parameter Weibull distributed ameliorating and deteriorating items with stock and advertisement frequency dependent demand under trade credit and preservation technology," OPSEARCH, Springer;Operational Research Society of India, vol. 60(2), pages 951-1002, June.
    7. Alaa Fouad Momena & Rakibul Haque & Mostafijur Rahaman & Sankar Prasad Mondal, 2023. "A Two-Storage Inventory Model with Trade Credit Policy and Time-Varying Holding Cost under Quantity Discounts," Logistics, MDPI, vol. 7(4), pages 1-25, October.

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