Joint pricing and replenishment decisions for non-instantaneous deteriorating items with partial backlogging, inflation- and selling price-dependent demand and customer returns

Abstract

This paper develops an Economic Order Quantity (EOQ) model for non-instantaneous deteriorating items with selling price- and ination-induced demand under the effect of ination and customer returns. The customer returns are assumed as a function of demand and price. Shortages are allowed and partially backlogged. The effects of time value of money are studied using the Discounted Cash Flow approach. The main objective is to determine the optimal selling price, the optimal length of time in which there is no inventory shortage, and the optimal replenishment cycle simultaneously such that the present value of total profft is maximized. An effcient algorithm is presented to ffnd the optimal solution of the developed model. Finally, a numerical example is extracted to solve the presented inventory model using the proposed algorithm and the effects of the customer returns, ination, and non-instantaneous deterioration are also discussed. The paper ends with a conclusion and outlook to future studies.