scholarly journals Optimal Pricing Decision of Fashion Apparel considering Experiential Service and Design Enhancement

Complexity ◽  
2020 ◽  
Vol 2020 ◽  
pp. 1-11 ◽  
Author(s):  
Qi Xu ◽  
Lili Zhou ◽  
Qi Chen
Keyword(s):  
Substitution Effects ◽  
Optimal Pricing ◽  
Selling Price ◽  
Market Demand ◽  
Complementarity Effect ◽  
Deterioration Rate ◽  
Pricing Decision ◽  
Proposed Model ◽  
Total Profit ◽  
Fashion Apparel

Fashionable clothing is susceptible to seasonality, fashion popularity, and other factors. The decline in the fashion level for fashion apparel will cause its market value to continuously decrease, reducing market demand and creating a backlog of apparel inventory. Under such a circumstance, the apparel retailer chooses to maintain the fashion of the goods by providing experiential services or enhancing product design capabilities. This paper focuses on the discussions on the issue of whether experience service and design efforts are complements or substitutes. The major objective is to simultaneously determine the experience service investment and the optimal selling price to maximize the total profit. First, a Cobb–Douglas utility function is used to derive a demand function that depends on the price and fashion level. Four kinds of inventory models are further established to obtain optimal pricing and inventory ordering strategies. Second, an algorithm is presented to search for the optimal solutions of the proposed model. Finally, a numerical example is provided to perform a sensitivity analysis of the key parameters and to discuss specific managerial insights. The numerical examples show that both the experiential services and the enhanced fashion design can effectively reduce the apparel company’s inventory and increase profits. When the two strategies are combined, they will produce complementary or substitution effects, which depend on the deterioration rate of the fashion level of the apparel. If the deterioration rate is less than a critical value, the interaction of experiential services and design investment has a complementarity effect.

scholarly journals Pricing Decision within an Inventory Model for Complementary and Substitutable Products

Mathematics ◽  
2019 ◽  
Vol 7 (7) ◽  
pp. 568 ◽  
Author(s):  
Ata Allah Taleizadeh ◽  
Masoumeh Sadat Babaei ◽  
Shib Sankar Sana ◽  
Biswajit Sarkar
Keyword(s):  
Optimization Method ◽  
Selling Price ◽  
Complementary Products ◽  
Substitutable Products ◽  
Pricing Decision ◽  
Proposed Model ◽  
Total Profit ◽  
Order Quantities ◽  
The Stability ◽  
Classical Optimization

A combination of substitutable and complementary products is very important for any business industry to make all-round profit from different aspects. How deterioration affects complementary products or substitutable products is discussed in this study. This study investigates the pricing and inventory decisions for complementary and substitutable items which are deteriorating in nature. Four models are analyzed where the demand of one product is dependent upon the selling price and the price of another product. This paper tries to compute the optimum prices and order quantities to optimize the total profit, which is the main aim. Theoretically, this model is solved by a classical optimization method. Numerical examples demonstrate the applicability of this model. Results conclude that the total profit is dependent on the degree of substitutability and complementarity. A sensitivity analysis of optimal solutions is given to test the stability of the proposed model.

A non-instantaneous inventory model of agricultural products considering deteriorating impacts and pricing policies

Kybernetes ◽  
2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Md. Rakibul Hasan ◽  
Abu Hashan Md Mashud ◽  
Yosef Daryanto ◽  
Hui Ming Wee
Keyword(s):  
Decision Model ◽  
External Factors ◽  
Agricultural Products ◽  
Optimal Pricing ◽  
Selling Price ◽  
Defective Items ◽  
Content Type ◽  
Deterioration Rate ◽  
Total Profit ◽  
Inventory Decision

Purpose External factors such as improper handling, extreme weather and insect attacks affect product quality. It is most obvious in fruit products which have a high deterioration rate. Moreover, decaying fruits will increase the deteriorating of other good ones. The purpose of this study is to derive the optimal pricing and replenishment decisions for agricultural products considering the effect of external factors that induce deterioration. Design/methodology/approach In this paper, the study investigates ways to reduce the product deterioration rate by separating the near defective items from the other good products and accelerating the quick sales of the near defective items at a discounted price. The objective is to maximize the total profit by optimizing the selling price and the replenishment cycles. Two scenarios are investigated. In the first scenario, the retailer offers a selling price discount for near defective products to stimulate customer demand. In the second scenario, the retailer does not offer such discounts. Findings An algorithm to solve the model is derived. Further, numerical examples are developed to compare the total profit for the two scenarios. Theoretical derivations and graphical results show the concavity of the profit function. Finally, the sensitivity analysis shows that the total profit of the discount model is higher. Originality/value This study contributes to a new pricing and inventory decision model. The research provides insights to retailers on making optimal pricing and replenishment decisions for non-instantaneous deterioration items, as well as reducing the external factors that influence higher deterioration rate through separating good products from the near defective ones which are sold at a discount to induce the sale.

scholarly journals Dynamic Pricing Policy Using Preservation Technology with Stock and Price Sensitive Demand

2020 ◽  
Vol 26 (3) ◽  
pp. 266-274
Author(s):  
Uttam Kumar Khedlekar ◽  
Priyanka Singh ◽  
Neelesh Gupta
Keyword(s):  
Dynamic Pricing ◽  
Policy Decision ◽  
Pricing Strategy ◽  
Selling Price ◽  
Market Demand ◽  
Pricing Policy ◽  
Preservation Technology ◽  
Proposed Model ◽  
Stock Policy ◽  
Dependent Demand

This paper aims to develop a dynamic pricing policy for deteriorating items with price and stock dependent demand. In declining market demand of items decreases with respect to time and also after a duration items get outdated. In this situation it needs a pricing policy to sale the items before end season. The proposed dynamic pricing policy is applicable for a limited period to clease the stock. Policy decision regarding the selling price could aggressively attracts the costumers. Objectives are to maximize the prot/revenue, pricing strategy and economic order level for such a stock dependent and price sensitive items. We are giving numerical example and simulation to illustrate the proposed model.

scholarly journals Optimal Pricing in Recycling and Remanufacturing in Uncertain Environments

2020 ◽  
Vol 12 (8) ◽  
pp. 3199
Author(s):  
Guangzhou Yan ◽  
Yaodong Ni ◽  
Xiangfeng Yang
Keyword(s):  
Historical Data ◽  
Programming Model ◽  
Optimal Pricing ◽  
Market Demand ◽  
Pricing Model ◽  
Uncertain Environments ◽  
Uncertainty Distribution ◽  
Equivalent Models ◽  
Fashion Products ◽  
Proposed Model

With the increasing awareness of environmental protection, firms pay much more attention to the recycling and remanufacturing of used products. This paper addresses the problem of the optimal pricing in recycling and remanufacturing in uncertain environments. We consider two strategies of remanufacturing products, by which a recycled product can be repaired and sold as a second-hand product or dissembled into materials for production of new products according to its quality. As the market demand for products and the quantities of recycled products, such as fashion products and mobile phones, usually lack historical data, this paper adopts uncertainty theory to depict uncertainty in establishing the pricing model. An uncertain programming model and a series of crisp equivalent models are proposed under the assumptions of particular uncertainty distribution. Finally, numerical experiments are performed to show how various parameters influence the results of the proposed model.

scholarly journals Inventory Policies for Price-Sensitive Stock-Dependent Demand and Quantity Discounts

2018 ◽  
Vol 3 (3) ◽  
pp. 245-257 ◽  
Author(s):  
Nita H. Shah ◽  
Monika K. Naik
Keyword(s):  
Selling Price ◽  
Quantity Discounts ◽  
Market Demand ◽  
Inventory Problem ◽  
Purchasing Cost ◽  
Decision Variables ◽  
Demand Rate ◽  
Total Profit ◽  
Holding Cost ◽  
Optimum Solution

It was usually observed in typical EOQ inventory models that the holding cost, the purchasing cost and the demand rate are constant and the purchasing cost is irrespective of the order size. But practically, the demand rate is based on various factors including sale price, seasonality and availability. Due to the lengthening of shortage periods, the holding cost per unit item increases. Also with the inclusion of quantity discounts, the unit purchasing cost is usually decreased for higher order sizes. This article addresses jointly with the inconsistency of the rate of demand, unit purchasing cost and unit holding cost for deteriorating items. This paper proposes a model based on an inventory problem including selling price of products and stock-dependent market demand rate, holding cost based on storage time and purchasing cost is influenced by order size by offering all units quantity discounts. An algorithm for estimating the optimum solution of decision variables by maximizing total profit and minimizing the overall cost of the model is developed in this paper. Validation of the developed model is confirmed with the help of a numerical example along with the sensitivity-analysis of decision variables by varying various inventory parameters.

scholarly journals Chemical supply chain coordination based on technology level and lead-time considerations

2021 ◽  
Author(s):  
Atieh Fander ◽  
Saeed Yaghoubi ◽  
Javad Asl-Najafi
Keyword(s):  
Supply Chain ◽  
Lead Time ◽  
Supply Chain Coordination ◽  
Sensitivity Analyses ◽  
Market Demand ◽  
Deterioration Rate ◽  
Managerial Implications ◽  
Total Profit ◽  
Finite Time Horizon ◽  
Technology Level

The production and transportation of chemicals is a risky process with high-cost operations for members of the supply chain, where some of the materials deteriorate over time and deal with value-reduction challenges. This paper studies a two-stage hazardous chemicals supply chain with a supplier and a manufacturer in a finite time horizon with a constant deterioration rate for both sides. To prevent potential hazards and improve product quality, the manufacturer invests in risk reduction and quality improvement technologies that can also attract more market demand. Owing to the importance of time in the storage and production of chemical products, this study focuses on a novel lead-time based discount contract to coordinate the channel members. The contract seeks to maximize the total profit of the chain by determining the optimal lead-time and manufacturer's technology level. By doing so, the supplier provides high-quality products and the manufacturer's unit supplying cost reduces and can buy more chemicals from the supplier. On the other hand, the supplier will have more time to supply the product and its initial cost will be reduced. As a result, the profit of both sides increases simultaneously. Some numerical examples are applied to examine the applicability of the proposed models. Finally, several sensitivity analyses on the main parameters are conducted to extract some in-depth managerial implications.

Supply Chain Competition with Information Sharing

2011 ◽  
Vol 486 ◽  
pp. 309-312
Author(s):  
Rong Yao He ◽  
Zhong Kai Xiong ◽  
Yu Xiong
Keyword(s):  
Supply Chain ◽  
Supply Chains ◽  
Information Sharing ◽  
Optimal Pricing ◽  
Market Demand ◽  
Pricing Policy ◽  
Supply Chain Competition ◽  
Demand Information ◽  
Total Profit

Given the case of two competing supply chains each consisting of one manufacturer and one retailer, we explore whether the retailers should share the market demand information they know with their manufacturers when the manufacturers do not know the same specific demand information. We also determine the optimal pricing policy and total profit for the retailers when each chain either shares or does not share market demand information. We find that sharing information is always more profitable for both retailer and supply chain.

scholarly journals Retailer's Optimal Pricing and Ordering Policies for Non-Instantaneous Deteriorating Items with Price-Dependent Demand and Partial Backlogging

2009 ◽  
Vol 2009 ◽  
pp. 1-18 ◽  
Author(s):  
Chih-Te Yang ◽  
Liang-Yuh Ouyang ◽  
Hsing-Han Wu
Keyword(s):  
Optimal Solution ◽  
Deteriorating Items ◽  
Optimal Pricing ◽  
Selling Price ◽  
Major Objective ◽  
Maximum Value ◽  
Total Profit ◽  
Replenishment Cycle ◽  
Theoretical Results ◽  
Dependent Demand

An inventory system for non-instantaneous deteriorating items with price-dependent demand is formulated and solved. A model is developed in which shortages are allowed and partially backlogged, where the backlogging rate is variable and dependent on the waiting time for the next replenishment. The major objective is to determine the optimal selling price, the length of time in which there is no inventory shortage, and the replenishment cycle time simultaneously such that the total profit per unit time has a maximum value. An algorithm is developed to find the optimal solution, and numerical examples are provided to illustrate the theoretical results. A sensitivity analysis of the optimal solution with respect to major parameters is also carried out.

Inventory management with online payment and preorder discounts

2020 ◽  
Vol 120 (11) ◽  
pp. 2001-2023
Author(s):  
Md. Rakibul Hasan ◽  
Yosef Daryanto ◽  
Tutul Chandra Roy ◽  
Yi Feng
Keyword(s):  
Inventory Management ◽  
Selling Price ◽  
Content Type ◽  
Innovative Strategies ◽  
Online Payment ◽  
Proposed Model ◽  
Total Profit ◽  
Replenishment Cycle ◽  
Optimum Price ◽  
Inventory Decision

PurposeThe advancement of technology opens many opportunities for retailing businesses to increase their profit through innovative strategies, such as discount offers, preorder programs and online payment services. The purpose of this study is to investigate decision-making methods for retailers who sell deteriorating products that utilize an e-commerce platform and offering preorder.Design/methodology/approachThe authors study the optimum price and replenishment cycle when multiple discounts policy is implemented for customers when they purchase during the preorder period and make the payment via an online system. The proposed economic order quantity model works for noninstantaneous deteriorating items that will maximize the total profit. Moreover, it considers the effect of selling price and advertisement on customer demand. The concavity of the profit function is proved. Then, a comparison is carried out between the traditional payment system and online payment. Finally, two numerical examples and the sensitivity analysis are performed.FindingsThe results show the benefit of the system with online payment compared to the traditional one. Further analysis shows that the total profit increases when the frequency of advertisement, interest from the banking company, location perimeter and the nondeterioration time increase.Originality/valueThe proposed model guides e-commerce retailers optimizing the price and inventory decision when they offer a discount, preorder program and online payment service. No researcher has undergone a study with this complexity.

scholarly journals An EOQ model for deteriorating items analyzing retailer’s optimal strategy under trade credit and return policy with nonlinear demand and resalable returns

2022 ◽  
Vol 12 (1) ◽  
pp. 47-55
Author(s):  
Mamta Kumari ◽  
Pijus Kanti De
Keyword(s):  
Trade Credit ◽  
Inventory Model ◽  
Optimal Order ◽  
Selling Price ◽  
Return Policy ◽  
Eoq Model ◽  
Proposed Model ◽  
Total Profit ◽  
Replenishment Cycle ◽  
Full Trade Credit

This paper presents an EOQ model where demand is dependent upon time and selling price. In the proposed model of inventory, the retailer allows its unsatisfied customers to return their product whereas the manufacturer offers a full trade credit policy to the retailer. To make our model realistic, we have assumed that the product returned can be resold with the same selling price. Number of returns is a function of demand. In this proposed inventory model considering deterioration, the retailer does not fully reimburse its customers for the returned product. The primary purpose of this inventory model is to determine the optimal selling price, optimal order quantity, and optimal replenishment cycle length in order to maximize the retailer’s total profit earned per unit time. A numerical example is also presented and a sensitivity analysis is carried to highlight the findings of the suggested inventory model.

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