×

Retailer’s optimal policy for a perishable product with shortages when supplier offers all-unit quantity and freight cost discounts. (English) Zbl 1004.91023

Summary: This paper addresses a problem encountered by retailers whose suppliers offer all-unit-quantity discounts on both purchase price and freight cost and the retailers in turn offer customers a lower price. The change in price and the resulting change in demand and their effects on inventory policy are analysed by considering a special class of price-dependent demand functions. Shortages in inventory are allowed and are completely backlogged. A solution algorithm is presented to determine retailer’s optimal price and ordering policies. A numerical example is given to illustrate the developed algorithm. Finally, the sensitivity analysis is carried out to examine the effects of changes of input parameters on the optimal results.

MSC:

91B24 Microeconomic theory (price theory and economic markets)
91B42 Consumer behavior, demand theory
PDFBibTeX XMLCite