 Inventory and pricing strategies for deteriorating items with limited capacity and time-proportional backlogging rateChandra K. Jaggi, K.K. Aggarwal and Priyanka Verma International Journal of Operational Research, 2010, vol. 8, issue 3, 331-354 Abstract: In the present study, a two-warehouse deterministic inventory model for deteriorating items with price-sensitive demand is developed. A rented warehouse (RW) is used to store the excess units over the fixed capacity of the own warehouse (OW). In addition, shortages are allowed in the OW and it is assumed that the backlogging demand rate is dependent on the duration of the stock-out. The objective is to find the optimal inventory and pricing strategies maximising the total average profit over the infinite planning horizon. For any given selling price, we first prove that the optimal replenishment schedule not only exists but is unique. Next, we show that the total average profit is a concave function of price when the replenishment schedule is given. The optimal selling price and replenishment schedule is also calculated for the proposed model. Finally, the results have been validated with the help of a numerical example. Keywords: inventory strategies; pricing strategies; two-warehouse systems; price-dependent demand; deterioration; time-proportional backlogging rate; inventory modelling; deteriorating items; optimal selling price; replenishment scheduling. (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:ijores:v:8:y:2010:i:3:p:331-354 Access Statistics for this article More articles in International Journal of Operational Research from Inderscience Enterprises Ltd |
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