Inventory policies for monotonic change in the purchase price

Suresha Kharvi and T.P.M. Pakkala

International Journal of Mathematics in Operational Research, 2022, vol. 22, issue 3, 349-362

Abstract: This article considers an optimal inventory policy for monotonic change in the purchase price where price change depends on the number of orders made. The planning horizon is considered as finite and yearly demand is assumed to be constant and known. A closed-form solution is obtained for the optimal order lengths. These closed-form solutions will be very useful to business managers. An algorithm is given to determine the optimal number of orders during the planning horizon. Some of the interesting properties of the optimal order quantities are discussed. A numerical example and sensitivity analysis are carried out to support the theoretical results.

Keywords: inventory; monotonic price change; optimal policy; optimal cost; optimal order lengths. (search for similar items in EconPapers)
Date: 2022
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