Retailer's pricing and lot sizing policy for exponentially deteriorating products under the condition of permissible delay in payments

Abstract

This article deals with the problem of determining the retailer's optimal price and lot size simultaneously when the supplier permits delay in payments for an order of a product whose demand rate is represented by a constant price elasticity function. It is assumed that inventory is depleted not only by customer's demand but also by deterioration. Investigation of the properties of an optimal solution allows us to develop an algorithm whose validity is illustrated using an example problem. (C) 1997 Elsevier Science Ltd.