Retailer’s inventory decisions with exchange scheme under the effect of advertisement efforts

ABSTRACT

In this study an inventory model with exchange scheme has been examined. Exchange scheme allows customers to bring old product, surrender it to the retailer and gain a price discount on purchase of the new product. Retailer implements promotional strategies to get maximum flow of customers and to have publicity of the exchange scheme at a large level. Retailer also allows customers to buy new product at normal price without exchange scheme. An inspection process is carried out to check quality of old products received under exchange scheme. Old products with reusable quality are reworked and sold again under refurnished category. Old products with worse quality are sold for the garbage value. Objective of the study is to obtain optimum values of cycle length, selling price and advertisement expenditure in order to maximize profit of the retailer. Model is validated through numerical examples and sensitivity analysis has been carried out.

KEYWORDS:

• Inventory model
• advertisement
• exchange scheme
• inspection
• rework

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Notes on contributors

Nita H. Shah

Nita H. Shah is a Professor in the Department of Mathematics, Gujarat University, Ahmedabad. She has 30 years of research experience in inventory management, forecasting and information technology and information systems. She has published 475+ articles in international journals, including APJOR (Singapore), International Journal of ProductionEconomics, OMEGA, CCERO (Belgium), ECPE (Romania), Measuring,Control & Simulation (France), JIOS (India), IJOMS (India), IndustrialEngineering (India), European Journal of Operational Research, IJIR, IJOR, IJMOR, IJBPSCM, IJPM, etc.

Pratik H Shah

Pratik H. Shah is lecturer at C.U.Shah Government Polytechnic College, Surendranagar and a research scholar in the Department of Mathematics, Gujarat University, Ahmedabad-380009, Gujarat, India. His research interest is inventory modelling and dynamical systems of inventory parameters. He has seven publications in his credit.

Milan B Patel

Milan B. Patel is a research scholar in the Department of Mathematics, Gujarat University, Ahmedabad-380009, Gujarat, India. His research interest is inventory modelling in fuzzy and cloud fuzzy environments. He has five publications in his credit.