Optimal pricing and ordering policies for retailers under order-size-dependent delay in payments

Abstract

This paper deals with the problem of determining the retailer's optimal price and order size simultaneously under the condition of order-size-dependent delay in payments. It is assumed that the length of the credit period is a function of the retailer's order size, and also the demand rate is a function of the selling price. We formulate two types of mathematical models from which algorithms are derived based on properties of an optimal solution. A numerical example is presented to illustrate the algorithms developed.