Production-inventory model with price-sensitive demand, volume agility and investment in preservation technology Online publication date: Thu, 26-Aug-2021
by Rini; K.M. Kamna; Priyamvada
International Journal of Services Operations and Informatics (IJSOI), Vol. 11, No. 2/3, 2021
Abstract: To sustain well in constantly changing markets, turbulence in demand is one aspect which needs significant attention. Parameters like price change, lucrative offers, competitor's strategy etc. affect customer's preference which eventually cause a demand-supply gap by disrupting the usual demand pattern. In such a scenario, flexible production rate is the key to prevent avoidable holding or backorders cost. In light of the same, this paper investigates a variable production rate model for a decaying item with price-sensitive demand. Here, it is assumed that the rate of deterioration can be controlled by investing in the preservation technology. Moreover, the unit production cost is the function of the rate of production which is variable. As well, the demand for the item is considered to be price-sensitive. The total profit is maximised by jointly optimising the production time and selling price. Further, numerical demonstration along with sensitivity analyses has been given.
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