AN EOQ MODEL WITH CONTROLLABLE SELLING RATE

Horng-Jinh Chang and Po-Yu Chen ()
Additional contact information
Horng-Jinh Chang: Asia University, Taichung 413, Taiwan
Po-Yu Chen: Graduate Institute of Management Sciences, Tamkang University, Taipei 251, Taiwan

Asia-Pacific Journal of Operational Research (APJOR), 2008, vol. 25, issue 02, 151-167

Abstract: According to the marketing principle, a decision maker may control demand rate through selling price and the unit facility cost of promoting transaction. In fact, the upper bound of willing-to-pay price and the transaction cost probably depend upon the subjective judgment of individual consumer in purchasing merchandise. This study therefore attempts to construct a bivariate distribution function to simultaneously incorporate the willing-to-pay price and the transaction cost into the classical economic order quantity (EOQ) model. Through the manipulation of the constructed bivariate distribution function, the demand function faced by the supplier can be expressed as a concrete form. The proposed mathematical model mainly concerns how to determine the initial inventory level for each business cycle, so that the profit per unit time is maximized by means of the selling price and the unit-transaction cost to control the selling rate. Furthermore, the sensitivity analysis of optimal solution is performed and the implication of this extended inventory model is also discussed.

Keywords: Transaction cost; demand function; inventory model; economic order quantity model (search for similar items in EconPapers)
Date: 2008
References: View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.worldscientific.com/doi/abs/10.1142/S0217595908001687
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wsi:apjorx:v:25:y:2008:i:02:n:s0217595908001687

Ordering information: This journal article can be ordered from

DOI: 10.1142/S0217595908001687

Access Statistics for this article

Asia-Pacific Journal of Operational Research (APJOR) is currently edited by Gongyun Zhao

More articles in Asia-Pacific Journal of Operational Research (APJOR) from World Scientific Publishing Co. Pte. Ltd.
Bibliographic data for series maintained by Tai Tone Lim ().