Pricing and inventory decisions for non-instantaneous deteriorating items with price and promotional effort stochastic demand

ABSTRACT

This study investigates an inventory model for a non-instantaneous deteriorating item with partial backlogging wherein the demand is stochastic in nature and depends on price and promotional effort whereas the deterioration rate is time proportional. Under these settings, a mathematical model is developed with the objective to maximise the expected profit per unit time by determining the optimal price and the length of replenishment cycle. Some useful theoretical results are established to deduce the optimal replenishment schedule. An effective algorithmic procedure is developed to find the optimal solutions to the proposed model. The applicability of the proposed model is illustrated by numerical example. Sensitivity analysis of the optimal solution with respect to key parameters has been carried out and the implications are discussed. The study indicates that though promotional effort stimulates the market demand, it is beneficial in an economic sense when it applies in a conservative manner.

KEYWORDS:

• Inventory
• non-instantaneous deterioration
• stochastic demand
• promotional effort
• partial backlogging

Acknowledgements

The authors deeply appreciate associate editor for his encouragement and patience. We also express our gratitude to the anonymous referees for their valuable comments and constructive suggestions that improve the quality of the paper.

Disclosure statement

No potential conflict of interest was reported by the authors.

ORCID

Hardik N. Soni http://orcid.org/0000-0001-5247-0379

Additional information

Notes on contributors

Hardik N. Soni

Hardik N. Soni is a Professor at Chimanbhai Patel Post Graduate Institute of Computer Applications, Ahmedabad, India. He received his BSc and MSc in Mathematics from Gujarat University, Ahmadabad, Gujarat, India. He received his PhD from Gujarat University in Inventory Control Management and Operations Research. His major research interests are in inventory control/optimisation and cooperation and coordination within supply chains. He has published his research works in reputable journals and books.

Dipali N. Suthar

Dipali Suthar is working as an Assistant Professor, Kalol Institute of Technology and Research Centre, Kalol, India. She has received her BSc from Gujarat University, Gandhinagar. She received MSc in Mathematics and now pursuing PhD from Kadi Sarva Vishwavidyalaya, Gandhinagar, Gujarat, India. Her research interest concentrates on inventory control and management under Uncertain Environment.