An inventory model for non-instantaneous deteriorating items with partial backlogging, permissible delay in payments, inflation- and selling price-dependent demand and customer returns

Ghoreishi M., Weber G., Mirzazadeh A.

ANNALS OF OPERATIONS RESEARCH, vol.226, no.1, pp.221-238, 2015 (SCI-Expanded) identifier identifier

  • Publication Type: Article / Article
  • Volume: 226 Issue: 1
  • Publication Date: 2015
  • Doi Number: 10.1007/s10479-014-1739-7
  • Journal Name: ANNALS OF OPERATIONS RESEARCH
  • Journal Indexes: Science Citation Index Expanded (SCI-EXPANDED), Scopus
  • Page Numbers: pp.221-238
  • Keywords: Optimal pricing and inventory, Permissible delay in payments, Non-instantaneous deteriorating items, Customer returns, Inflation, TIME-VALUE, ORDER QUANTITIES, POLICY, REPLENISHMENT, SHORTAGES, MONEY, ITEM, EOQ
  • Middle East Technical University Affiliated: Yes

Abstract

This paper develops an economic ordering policy model for non-instantaneous deteriorating items with selling price- and inflation-induced demand under the effect of inflation, permissible delay in payments and customer returns. Shortages are allowed and partially backlogged. The customer returns are assumed to increase with both the quantity sold and the product price. The main objective is to determine the optimal selling price, the optimal length of time in which there is no inventory shortage, and the optimal replenishment cycle simultaneously, to minimize the present value of the total profit. An efficient algorithm is presented to find the optimal solution of the developed model. Finally, a numerical example is extracted to solve the presented inventory model using the proposed algorithm.