Search

In this article, an order-level inventory system for deteriorating items has been developed with demand rate as a function of selling price. The demand and the deterioration rate are price dependent and time proportional, respectively. We have considered a perishable item that follows a three-parameter Weibull distribution deterioration. Shortages are not permitted in our model. The optimal solution is illustrated with a numerical example and the sensitivity analysis of parameters is carried out. [ABSTRACT FROM PUBLISHER]

Up to now, many newsboy problems have been considered in the stochastic inventory literature. Some assume that stochastic demand is independent of selling price (p) and others consider the demand as a function of stochastic shock factor and deterministic sales price. This article introduces a price-dependent demand with stochastic selling price into the classical Newsboy problem. The proposed model analyses the expected average profit for a general distribution function of p and obtains an optimal order size. Finally, the model is discussed for various appropriate distribution functions of p and illustrated with numerical examples. [ABSTRACT FROM AUTHOR]