Optimisation of fuzzy EOQ model for advertising and price sensitive demand model under dynamic ceiling on potential adoption

ABSTRACT

Marketing strategies such as advertising and pricing can play an important role in the acceptance of technology products by consumers. This phenomenon indicates that diffusion of technology products in the society may have strong linkages with unit selling price and advertisement effort. Therefore, management should sincerely reflect on pricing and advertising strategy during formulation of the inventory policies. This paper aims to develop an economic order quantity model for finding strategy for a firm that sells technology products' over a finite planning horizon. Demand is considered to follow a lifecycle phenomenon with dynamic ceiling on the potential adoptions and sensitive to advertising expenditure and unit selling price. The fuzzy criterion has also been incorporated to address the problems of uncertain nature of marketing parameters. The model is illustrated with a numerical example and a comprehensive sensitivity analysis of the optimal solution with respect to different parameters has also been performed.

KEYWORDS:

• Technology product
• innovation diffusion
• EOQ
• fuzzy variables
• function principle
• trapezoidal membership

Acknowledgments

The authors are thankful to the anonymous referees for their useful suggestions. This article was revised in light of the comments.

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Notes on contributors

Udayan Chanda

Udayan Chanda is currently working as an assistant professor in the Department of Management, BITS Plilani, Pilani Campus. Earlier he was associated with Industrial Statistics Lab., Department of Information & Industrial Engineering, Yonsei University as a post-doctoral fellow and Department of Operational Research, University of Delhi as an assistant professor. He received his Ph.D. degree in Marketing Models and Optimization (Operational Research) from the University of Delhi, Delhi. He has published numerous papers in the area of marketing models, optimization, software reliability and inventory management in international journals and conference proceedings. His current research includes marketing models of technology leakage and valuation inventory modelling and technology credit risk (for small and medium enterprises).

Alok Kumar

Alok Kumar is working as an assistant professor in the area of quantitative techniques and operations at FORE School of Management, New Delhi. He is a graduate in mathematics (Hons.) from the University of Delhi and a post-graduate in operational research from Department of Operational Research, University of Delhi. He has been awarded Ph.D. degree in operational research in the area of inventory management at University of Delhi. His area of research interest is developing mathematical models in the field of inventory management and has published numerous research papers in refereed journals of national and international repute in the field of developing models for integration of innovation diffusion theory with inventory management. He has several years of teaching and research experience. Prior to FORE he has taught several papers in the area of business management such as business statistics, operations research, business research methods and operations management in different management colleges. There are 15 articles which have been published (accepted for publication) in international journals of high repute, several articles are published in conference proceedings, numerous articles are published as book chapters, three articles are published as working papers and few articles have been communicated in different international journals of high repute.