Optimal inventory and pricing for EOQ inventory model with price-dependent demand and exponential demand - in third order equation

C.K. Sivashankari and T. Nithya

International Journal of Operational Research, 2025, vol. 53, issue 4, 450-473

Abstract: In the present work, an optimal lot size and optimal pricing with price-dependent and exponential demand for deteriorative items in third order equations is developed and also a special case for predetermined price is also considered. Optimal lot size and price are two decision variables in this paper and optimal cycle time is a decision variable in special case of this paper. The breakeven price is considered, and the law of demand is proved. There are two models designed: the first model utilises an inventory model with optimum output and price in third order equation and the second model uses optimal cycle time of an inventory model for determining the price-breakeven point. But to my knowledge, no authors developed models for optimal pricing, and optimal lot size policies in price dependent and exponential demand in a third-order equation. This aims to obtain optimal lot size as well as pricing for overall maximum profits. The essential, as well as sufficient mathematical models are developed. Several examples, numerical in nature, are offered to achieve model validation. Additionally, a sensitivity analysis is carried out in conjunction with the representation's building blocks. Microsoft Visual Basic 6.0 was used to program the model's outcome validation.

Keywords: EOQ; optimality; price-dependent demand; exponential time-dependent demand; sensitivity analysis; cycle time. (search for similar items in EconPapers)
Date: 2025
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