Pricing and replenishment strategy for a multi-market deteriorating product with time-varying and price-sensitive demand

Po-Chung Yang; Hui-Ming Wee; Shen-Lian Chung; Yong-Yan Huang

doi:10.3934/jimo.2013.9.769

Article Contents

2013, Volume 9, Issue 4: 769-787. Doi: 10.3934/jimo.2013.9.769

This issue Previous Article Optimal investment-consumption problem with constraint Next Article A smoothing-type algorithm for absolute value equations

Pricing and replenishment strategy for a multi-market deteriorating product with time-varying and price-sensitive demand

1.
Marketing and Logistics Management Department, St. John’s University, Tamsui, Taipei 25135
2.
Industrial and Systems Engineering Department, Chung Yuan Christian University, Chungli, 32023
3.
Information Management Department, St. John’s University, Tamsui, Taipei 25135
4.
Industrial Engineering and Management Department, St. John’s University, Tamsui, Taipei 25135

Received: July 31, 2011

Revised: February 28, 2013

Published: September 2013

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Abstract

Due to globalization and technological advances, increasing competition and falling prices have forced enterprises to reduce cost; this poses new challenges in pricing and replenishment strategy. The study develops a piecewise production-inventory model for a multi-market deteriorating product with time-varying and price-sensitive demand. Optimal product pricing and material replenishment strategy is derived to optimize the manufacturer's total profit. Sensitivity analyses of how the major parameters affect the decision variables were carried out. Finally, the single production cycle is extended to multiple production cycles. We find that the total profit for multiple production cycle increases 5.77/100 when compared with the single production cycle.

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Mathematics Subject Classification: Primary: 58F15, 58F17; Secondary: 53C35.

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