 Determining optimal inventory policy and sales price under promotional expenditure for some Veblen productsAnil Kumar Agrawal, Amit Ambar Gupta and Manu K. Vora International Journal of Applied Management Science, 2022, vol. 14, issue 2, 114-135 Abstract: This paper focuses on determining the optimal promotional expenses as well as optimal sales price and lot-sizing policies for Veblen products, generally being luxury goods consumed conspicuously. The price-demand relationships considered for the product are the ones suggested by Leibenstein (1950). The promotion is assumed to increase the product's perceived value facilitating in increasing the selling price without sacrificing the demand. The effect of promotional expenses has been analysed for the niche and mass markets using two different relationships. For obtaining the optimal pricing, lot-sizing and promotional expenses, a mathematical model has been developed and a GA-based heuristic is also proposed. Numerical examples are taken to illustrate the use of the proposed problem solving approaches and also to carry out sensitivity analyses. The results show almost no impact of variation in setup cost and carrying cost rate on optimal inventory policy, but of the product unit cost. Keywords: conspicuous consumption; Veblen effect; pricing; promotion; price-sensitive demand. (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ids:injams:v:14:y:2022:i:2:p:114-135 Access Statistics for this article More articles in International Journal of Applied Management Science from Inderscience Enterprises Ltd |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.