Application of Various Price-Discount Policy for Deteriorated Products and Delay-in-Payments in an Advanced Inventory Model

Abstract

In this proposed research, clear prospects of a real life marketing scenario, by analyzing a price discount policy and variable demand, are derived. The proposed study presents a production model along with time-dependent and selling price related demand for decaying items. Items deteriorate over time, therefore, considering deterioration in this model makes it more acceptable to the present marketing situation. The concept of delay-in-payments is utilized in this inventory system. In this research, a retailer buys some products, enjoys constant credit-period offers which are provided by the supplier. This model depicts a price discount strategy which is based on purchasing cost to attract more consumers in any business industry. By using this strategy, any manufacturer or business may gain more profit in comparison to methods suggested by earlier literature. The average profit function of the inventory system is maximized analytically and also finds the selling-price per unit and duration of the inventory cycle optimally. A numerical example, along with a case study and their graphical representations, are incorporated to verify the optimality of this research very clearly. The findings of this research have maximized the average profit function more than the existing literature.

Keywords

• variable demand
• credit period
• price discount
• production
• deterioration