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Abstract
Companies, especially in the Hi-tech (high-technology) industry (such as computer, communication and consumer electronic products), often provide a replacement warranty period for purchased items. In reality, simultaneously determining the price and inventory decisions under warranty policy is an important issue. The objective of this paper is to develop a joint pricing and inventory model for Hi-tech products under replacement warranty policy. In the first model, we consider a Hi-tech product feature in which the selling price is declining in a trend. We determine the optimal inventory level for each period and retail price for the first period while maximising the total profit. In the second model, we further determine the optimal retail price and inventory level for each period in the dynamic demand market. This study develops solution approaches to solve the problems described above. Numerical analysis discusses the influence of system parameters on the company's decisions and behaviours. The results of this study could serve as a reference for business managers or administrators.
Additional information
Notes on contributors
Yu-Chung Tsao
Yu-Chung Tsao is an associate professor in the Department of Industry Management at National Taiwan University of Science and Technology. His research interests are in the areas of decision sciences, supply chain and logistics management, production and operations management.
Wei-Guang Teng
Wei-Guang Teng is an assistant professor in the Department of Engineering Science at National Cheng Kung University. His research interests are in the areas of knowledge management, data mining and database system.
Ruey-Shii Chen
Ruey-Shii Chen is an assistant professor in the Department of Business Management at Tatung University. His research interests are in the areas of financial management and industrial economy.
Wang-Ying Chou
Wang-Ying Chou received his master's degree from the Department of Business Management at Tatung University. His research interests are in the areas of pricing and warranty policies.
