Supply Chain Inventory Problem with Price Increased and Demand Rate Depends on Retail Price

Abstract

Abstract-This study investigates the supply chain inventory problems when the supply price increases and market demand rate depends on retail price. The purpose of this study will be to determine optimal special order quantity, retail price and production cycle by maximizing the increment of joint total profit. Furthermore, due to the vendor may or not provide all the special order quantity at the buyer's next replenishment date and hence the shortage will or not occur, two specific situations are discussed in this study. A simple algorithm to find the optimal solution is developed. Finally, several numerical examples will be presented to demonstrate the developed model and solution procedure to provide manager a useful decision consultation.Index Terms-Inventory, deteriorating items, supply chain, price increase, price-dependent demand.

Optimal control of an inventory system under whole sale price changes

“…Taleizadeh et al [34] developed an EOQ model for perishable products when back ordered shortage is allowed and the supplier temporarily reduces the purchasing price and let the customer make a special order. Yang and Ouyang [38] determined optimal special order quantity for a customer in an environment where the purchasing price has an impact on the demand rate and an announced price increase occurs. Chung et al [6] investigated a model for deteriorating products when the purchasing price increases and there is an opportunity to make a special order prior to price increment.…”