Inventory Control Models with Motivational Policies by Ata Allah Taleizadeh

Author:Ata Allah Taleizadeh
Language: eng
Format: epub
Publisher: Springer International Publishing, Cham

(4.75)

Moreover, when θ approaches zero, Eq. (4.75) will change to Eq. (4.76) which is the optimal period length of classical EOQ model.

(4.76)

Example 4.6

Based on parameters values of Example 4.5 and Using Eq. (4.74) we have (Taleizadeh 2014a):

And using Eq. (4.75);

Finally, the order quantity is;

4.4 Stochastic Inventory Model with Advance Payment

In the present competitive market, the selling price of a good is one of the decisive factors in selecting the good for use. In practice, higher selling price of a good negates the demand whereas reasonable and low price has a reverse impact. This argument is more appropriate for defective goods whose demand is always price dependent. Whitin (1955) first presented an inventory model considering the impact of price dependent demand. Generally this type of demand is seen in finished goods. Though extensive research work has been done in this area Kunreuther and Richard (1977), Lee and Rosenblatt (1986), Abad (1996), Mukherjee (1987), very few of them have considered selling price as a decision variable Das and Maiti (2003), Maiti and Maiti (2006). Taking the above shortcomings into account, here an inventory model is extended where demand of the good depends on selling price, lead-time is stochastic in nature, vendor has to pay some advance payment at the time of ordering and is eligible for a price discount against extra advance payment.

Assumptions and notations

Single-good inventory model with shortages in a finite time horizon is extended using the following notations and assumptions (Maiti et al. 2009): X

Lead-time which is a random variable (r. v)

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