Ordering and pricing policies for random discount offerings and permissible shortages

Authors: Arcelus, F.J.¹; Pakkala, T.P.M.²; Srinivasan, G.³

Source: International Journal of Operational Research, Volume 2, Number 4, 24 June 2007 , pp. 400-413(14)

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Abstract:

This study develops the ordering and pricing policies of a retailer, confronted with a price-dependent demand and a vendor offering a discount on the wholesale/regular price during sales sub-periods, which are repeated randomly and last for a random amount of time. The inventory level forms a regenerative stochastic process, with regeneration points at the start of the discount sub-periods. The objective is to maximise the long run expected profit per unit time, expressed as a function the order quantity, reorder level and retail price for regular and discount sub-periods.

Keywords: TECHNICAL JOURNALS; Materials and Manufacturing; MANAGEMENT JOURNALS; Operational Management, Marketing and Services

Document Type: Research article

DOI: http://dx.doi.org/10.1504/IJOR.2007.014170

Affiliations: 1: Emeritus Professor, University of New Brunswick, Canada and Departamento de Gestion de Empresas, Universidad Publica de Navarra, 31006 Pamplona, Navarra, Spain. 2: Department of Statistics, Mangalore University, Mangalagangotri 574 199, India. 3: Faculty of Administration, University of New Brunswick, P.O. Box 4400, Fredericton, N.B. E3B 5A3, Canada

Publication date: 2007-06-24

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