Title: An EOQ model for perishable item with stock and price dependent demand rate

Authors: Sudhansu Khanra, Shib Sankar Sana, Kripasindhu Chaudhuri

Addresses: Department of Mathematics, Tamralipta Mahavidyalaya, Tamluk, Purba-Medinipur, West Bengal, India. ' Department of Mathematics, Bhangar Mahavidyalaya, University of Calcutta, Bhangar, 24Parganas (South), West Bengal, India. ' Department of Mathematics, Jadavpur University, Kolkata 700032, West Bengal, India.

Abstract: This paper deals with a single-item economic order quantity model where the vendor is in a position to influence demand of customers by its stock display and pricing decision. In general, most of the merchandise have a certain life time after which deterioration starts. In this situation, a good management decides to boost the sales of their products at reduced price to avoid more losses due to deterioration. Consequently, the demand of deteriorating items is an increasing function of reduction rate on selling price. It is thus confronted with simultaneous reduction on selling price and replenishment quantity decisions, which would jointly maximise the expected average profit over an infinite planning horizon. Computational aspects of the proposed model are discussed, and formulation is shown to give successful results on test problems. The sensitivity of the optimal solution to changes in the values of different parameters is also examined.

Keywords: inventory management; stock dependent demand; reduction rate; item deterioration; EOQ modelling; perishable items; price dependent demand; economic order quantity; selling price; replenishment quantity.

DOI: 10.1504/IJMOR.2010.032721

International Journal of Mathematics in Operational Research, 2010 Vol.2 No.3, pp.320 - 335

Published online: 17 Apr 2010 *

Full-text access for editors Access for subscribers Purchase this article Comment on this article