Ordering and pricing policies for random discount offerings and permissible shortages
by F.J. Arcelus, T.P.M. Pakkala, G. Srinivasan
International Journal of Operational Research (IJOR), Vol. 2, No. 4, 2007

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.

Online publication date: Sun, 24-Jun-2007

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