Price Dependent Inventory Model with Discount Offers at Random Times
Publication Type
Journal Article
Publication Date
6-2002
Abstract
An inventory model with a supplier offering discounts to a reseller at random epochs is considered. The offer is accepted when the inventory position is lower than a threshold level. Three different pricing policies in which demand is induced by the reseller's price variation are compared. Policy I is the EOQ policy without discount offers. Policy 2 is a uniform price, stock-independent policy. Policy 3 is a stock level-dependent, discriminated price policy. Assuming constant demand rates, expressions are obtained for the optimal order quantities, prices, and profits. The numerical experiments show that if it is better to accept a supplier's discount, then it benefits the reseller to transfer the discount to downstream customers.
Keywords
Inventory management, random discount offers, pricing, lot sizing
Discipline
Operations and Supply Chain Management | Operations Research, Systems Engineering and Industrial Engineering
Research Areas
Operations Management
Publication
Production and Operations Management
Volume
11
Issue
2
First Page
139
Last Page
156
ISSN
1059-1478
Identifier
10.1111/j.1937-5956.2002.tb00488.x
Publisher
Wiley
Citation
GOH, Mark and MOOSA, Sharafali.
Price Dependent Inventory Model with Discount Offers at Random Times. (2002). Production and Operations Management. 11, (2), 139-156.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/888
Additional URL
https://doi.org/10.1111/j.1937-5956.2002.tb00488.x
