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Optimal times of price reductions for an inventory model with partial backorder and vertical shift demand. (English) Zbl 1377.90010
Summary: This paper investigates an inventory control problem where a firm orders and sells an inventory item through discount strategy in a price sensitive market. From the economic points of view, customers may expect a further price reduction when a firm uses pricing promotion to stimulate demand, the demand curve may vertically shift down when a firm reduces the selling price. Taking these phenomena into account, this paper developed a continuous inventory model for finding the ordering quantity, the number of pricing changing and times of price changes simultaneously so as to maximize the total profit. A solution procedure is developed for finding the optimal decision rules.

MSC:
90B05 Inventory, storage, reservoirs
90B50 Management decision making, including multiple objectives
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