A note on profit-maximization fuzzy EOQ models for deteriorating items with two dimensional sensitive demand

Abstract

Marketing researchers and practitioners have long recognized that the demand for many retail items is proportional to the amount of inventory displayed. As markets have become more and more competitive, many business practices show that the presence of a larger quantity of goods displayed may attract more customers than that of a smaller quantity of goods. Essentially, this study focuses on pricing and ordering strategies since the demand for goods may be affected for a firm that sells a seasonal item over a finite planning time. The objective is to maximize total profit for a fuzzy EOQ model in which demand is two dimensional and sensitive to stock and selling price, where pricing is a major strategy for a retailer. This paper considers the modification of the EOQ formula for deteriorating items in the presence of imprecisely estimated system cost, i.e. holding cost and ordering cost and defined on a bounded interval. The main contribution to the literature is the inclusion of the fuzzy approach in a continuous crisp model. Here, with concavity of price changing times, a solution procedure is presented to determine the optimal decision parameters. The analysis shows the influence of key model parameters.

Keywords:

• inventory
• pricing
• ordering
• sensitive demand
• fuzzy
• profit maximization
• continuous model

Keywords:

• C61; C44