Nowadays business owners use lots of incentive schemes to make customers buy more products. In this paper optimal ordering policy for customers is obtained when the manufacturer increases the purchasing price or temporary decreases it. Offering a special sale from the manufacturer is probabilistic and shortage occurs as partial backlogging. In this paper, the initial level of inventory when the purchasing price changes is not equal to zero. With respect to the assumptions, the amount of special order quantity, the shortage quantity, and the expected total saving from making an special order is optimized for the customer. The optimal amount of decision variables are obtained by maximizing the expected total saving function and a closed-form solution is derived. Several numerical examples are solved and sensitivity analysis is performed to prove the applicability of the proposed model. Finally, the impact of some parameters of the model including the demand, the probability of making a special order, the future prices, and the initial inventory is investigated. Optimal ordering policy for the customers is obtained in cases when an announced price increase occurs and when the prices temporarily decrease.
Keywords: Inventory control, special sale, known price increase, partial backordering, uncertain special order
@article{RO_2021__55_S1_S289_0,
author = {Taleizadeh, Ata Allah and Zarei, Hamid Reza and Sana, Shib Sankar},
title = {Optimal control of an inventory system under whole sale price changes},
journal = {RAIRO. Operations Research},
pages = {S289--S305},
year = {2021},
publisher = {EDP-Sciences},
volume = {55},
doi = {10.1051/ro/2019078},
mrnumber = {4223113},
language = {en},
url = {https://www.numdam.org/articles/10.1051/ro/2019078/}
}
TY - JOUR AU - Taleizadeh, Ata Allah AU - Zarei, Hamid Reza AU - Sana, Shib Sankar TI - Optimal control of an inventory system under whole sale price changes JO - RAIRO. Operations Research PY - 2021 SP - S289 EP - S305 VL - 55 PB - EDP-Sciences UR - https://www.numdam.org/articles/10.1051/ro/2019078/ DO - 10.1051/ro/2019078 LA - en ID - RO_2021__55_S1_S289_0 ER -
%0 Journal Article %A Taleizadeh, Ata Allah %A Zarei, Hamid Reza %A Sana, Shib Sankar %T Optimal control of an inventory system under whole sale price changes %J RAIRO. Operations Research %D 2021 %P S289-S305 %V 55 %I EDP-Sciences %U https://www.numdam.org/articles/10.1051/ro/2019078/ %R 10.1051/ro/2019078 %G en %F RO_2021__55_S1_S289_0
Taleizadeh, Ata Allah; Zarei, Hamid Reza; Sana, Shib Sankar. Optimal control of an inventory system under whole sale price changes. RAIRO. Operations Research, Tome 55 (2021), pp. S289-S305. doi: 10.1051/ro/2019078
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