Economic Order Quantity Model with Innovation Diffusion Criterion under Influence of Price-Dependent Potential Market Size

K. K. Aggarwal () and Alok Kumar ()
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K. K. Aggarwal: Department of Operational Research, Faculty of Mathematical Sciences, New Academic Block, University of Delhi, Delhi 110007, India
Alok Kumar: Department of Operational Research, Faculty of Mathematical Sciences, New Academic Block, University of Delhi, Delhi 110007, India

International Journal of Innovation and Technology Management (IJITM), 2014, vol. 11, issue 05, 1-25

Abstract: In last few decades various models developed under inventory control section whether of probabilistic or deterministic nature did not consider the effect of marketing parameters. The marketing parameters especially associated with innovation diffusion theory make the inventory models more realistic. In this paper, an inventory model has been proposed based on the explicit assumptions of interaction of marketing parameters to the optimal inventory replenishment policy. A time-dependent innovation driven demand has been incorporated in the basic economic order quantity (EOQ) model to know the realistic features of the model. This model assumes that potential market size is dynamic over time and is dependent on the price of the product. The model is illustrated with a numerical example and to know the effectiveness of the model a sensitivity analysis of the optimal solution with respect to different parameters has been performed.

Keywords: Innovation diffusion; EOQ; dynamic potential market size; price-dependent demand (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (2)

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DOI: 10.1142/S021987701450028X

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