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Discount pricing policy for deteriorating items under preservation technology cost and shortages

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  • Anubhav Namdeo
  • Uttam Kumar Khedlekar
  • Priyanka Singh

Abstract

This paper presents an inventory model with a constant rate of deterioration of the product, and shortages are allowed at the end of the cycle. The stock-dependent and price-sensitive demand have been considered with a policy of providing price discount to uplift the market demand. Preservation technology is applied to preserve the items from deterioration. The objective of this model is to maximize the total profit function by finding the optimal replenishment time, the optimal preservation technology investment and the optimal quantity. Next, we have shown that the total profit is a concave function of the replenishment time and preservation technology cost. Discount in pricing may be offered at a time of festival, season breaks down, lockdown and clearance of stock, before introducing a new product with up-gradations, etc. Numerical examples and graphical analysis are provided to explain the model. The discount policy could help any business organizations for smooth running of the business and obtain respective optimal profit.

Suggested Citation

  • Anubhav Namdeo & Uttam Kumar Khedlekar & Priyanka Singh, 2020. "Discount pricing policy for deteriorating items under preservation technology cost and shortages," Journal of Management Analytics, Taylor & Francis Journals, vol. 7(4), pages 649-671, October.
    • Handle: RePEc:taf:tjmaxx:v:7:y:2020:i:4:p:649-671
    DOI: 10.1080/23270012.2020.1811787
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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. 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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