Title: Economic order quantity under permissible delay in payments for new products in dynamic pricing-advertising condition

Authors: Alok Kumar; Udayan Chanda

Addresses: FORE School of Management, B-18, Qutub Institutional Area, New Delhi-110016, India ' Department of Management, BITS Pilani, Pilani Campus, Rajasthan, Pilani-333031, India

Abstract: Economic ordering policies for a retailer are often strategies subject to the nature of demand, and the kind of benefits received from the suppliers. Globalisation and continuum innovations of new products/technologies put enormous pressure on retailers to attract new customers and look after the current ones concurrently. Thus, a realistic economic order quantity (EOQ) model should link the present business requirements, which can enable the retailer to achieve its business objectives. Based on hazard rate demand, an integrated EOQ model is discussed in the paper for permissible delay in payments, under the assumption that supplier may offer credit periods to the retailer. The demand rate is assumed to be governed by the hazard rate function under dynamic pricing and advertising. The proposed framework is demonstrated with a numerical example and a comprehensive sensitivity analysis is also performed to validate effectiveness of the model.

Keywords: economic order quantity; EOQ; hazard rate; dynamic price; dynamic advertising expenditure; permissible delay in payments.

DOI: 10.1504/IJBIR.2017.083538

International Journal of Business Innovation and Research, 2017 Vol.13 No.2, pp.203 - 221

Received: 06 Mar 2015
Accepted: 02 May 2015
Published online: 10 Apr 2017 *

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