Title: An EOQ model with shortages and selling price dependent time varying demand

Authors: Arindum Mukhopadhyay; Adrijit Goswami

Addresses: Rajiv Gandhi Indian Institute of Management Shillong, Shillong – 793014, India ' Department of Mathematics, Indian Institute of Technology, Kharagpur – 721302, India

Abstract: Owing to intense technological growth and extreme global competition, demand of a newly launched hi-tech item may decrease over time because some better quality items may be available in the marketplace at the same or lower price. This situation pushes the manufacturers to reduce selling price so that demand of that item may increase. If a particular product is not available, competitive market motivates customers to switch to another organisation for similar type of products. Keeping all these things in mind, we have developed an EOQ type model for time and selling price dependent demand, decreasing selling price and partial backlogging. We have formulated the mathematical model, and the procedures to derive the optimal solution are discussed. The effectiveness of the proposed model is illustrated with the help of numerical examples. Sensitivity of the optimal order quantity and optimal cost for changes in various parameter values are also examined.

Keywords: inventory management; productivity; competitiveness; partial backlogging; selling price; EOQ; economic order quantity; shortages; time varying demand; hi-tech products; high technology; mathematical modelling.

DOI: 10.1504/IJSCIM.2016.076411

International Journal of Supply Chain and Inventory Management, 2016 Vol.1 No.2, pp.133 - 153

Accepted: 01 Jun 2015
Published online: 06 May 2016 *

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