A Note on Non Linear Optimal Inventory Policy Involving Instant Deterioration of Perishable Items with Price Discounts


Authors

M. Pattnaik - Dept. of Business Administration, Utkal University, Bhubaneswar-751004, India


Abstract

This paper derives a non linear optimal inventory policy involving instant deterioration of perishable items with allowing price discounts. This paper postulates that the inventory policy of perishable items very much resembles that of price discounts. Such a parallel policy suggests that improvements to production systems may be achievable by applying price discounts to increase demand rate of the perishable items. This paper shows how discounted approach reduces to perfect results, and how the post deteriorated discounted EOQ model is a generalization of optimization. The objective of this paper is to determine the optimal price discount, the cycle length and the replenishment quantity so that the net profit is maximized. The numerical analyses show that an appropriate discounted pricing policy can benefit the retailer and that discounted pricing policy is important, especially for deteriorating items. Furthermore the instant post deteriorated price discount crisp economic order quantity (CEOQ) model is shown to be superior in terms of profit maximization. The sensitivity analysis of parameters on the optimal solution is carried out.


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