Optimal Pricing and Production Planning for Multi-product Multi-period Systems with Backorders

Elham Mardaneh () and Louis Caccetta ()
Additional contact information
Elham Mardaneh: Curtin University of Australia
Louis Caccetta: Curtin University of Australia

Journal of Optimization Theory and Applications, 2013, vol. 158, issue 3, No 14, 896-917

Abstract: Abstract In this paper, we develop models for production planning with coordinated dynamic pricing. The application that motivated this research is manufacturing pricing, where the products are non-perishable assets and can be stored to fulfill the future demands. We assume that the firm does not change the price list very frequently. However, the developed model and its solution strategy have the capability to handle the general case of manufacturing systems with frequent time-varying price lists. We consider a multi-product capacitated setting and introduce a demand-based model, where the demand is a function of the price. The key parts of the model are that the planning horizon is discrete-time multi-period, and backorders are allowed. As a result of this, the problem becomes a nonlinear programming problem with the nonlinearities in both the objective function and some constraints. We develop an algorithm which computes the optimal production and pricing policy on a finite time horizon. We illustrate the application of the algorithm through a detailed numerical example.

Keywords: Production planning; Dynamic pricing; Nonlinear programming applications; Multi-product multi-period systems (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://link.springer.com/10.1007/s10957-013-0273-0 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

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:spr:joptap:v:158:y:2013:i:3:d:10.1007_s10957-013-0273-0

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/10957/PS2

DOI: 10.1007/s10957-013-0273-0

Access Statistics for this article

Journal of Optimization Theory and Applications is currently edited by Franco Giannessi and David G. Hull

More articles in Journal of Optimization Theory and Applications from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().