Optimal replenishment and stocking strategies for inventory mechanism with a dynamically stochastic short-term price discount

Yiju Wang (), Hengxia Gao and Wei Xing ()
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Yiju Wang: Qufu Normal University
Hengxia Gao: Qufu Normal University
Wei Xing: Qufu Normal University

Journal of Global Optimization, 2018, vol. 70, issue 1, No 3, 27-53

Abstract: Abstract This paper considers an inventory mechanism with a non-deterministic short-term price discount. In the mechanism, the supplier has a tendency to offer retailers a short-term price discount for a future occasion. Subsequently, when the discount occurs, the discount stock would start to reduce gradually. Therefore the discount might terminate ahead of schedule once the discount stock is depleted, which means that the discount possibility will gradually decrease from 1 ever after the start of the discount. For this system, to maximize the retailer’s profit, we establish an optimal replenishment and stocking strategies model. Based on the retailer’s cost-benefit analysis, we present a solution method for the model and provide an optimal ordering policy to the retailer. The given numerical experiments illustrate the validity of the model.

Keywords: Short-term price discount; Stochastic; Replenishment and stocking strategy; Global optimization strategy (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (4)

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DOI: 10.1007/s10898-017-0522-0

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