Pricing, Production, and Inventory Policies for Manufacturing with Stochastic Demand and Discretionary Sales

2006 ◽  
Vol 8 (2) ◽  
pp. 149-168 ◽  
Author(s):  
Lap Mui Ann Chan ◽  
David Simchi-Levi ◽  
Julie Swann
Keyword(s):  
Stochastic Demand ◽  
Inventory Policies ◽  
Discretionary Sales

scholarly journals Optimal inventory policies for imperfect inventory with price dependent stochastic demand and partially backlogged shortages

2012 ◽  
Vol 22 (2) ◽  
pp. 199-223 ◽  
Author(s):  
Jhuma Bhowmick ◽  
G.P. Samanta
Keyword(s):  
Stochastic Demand ◽  
Optimal Order ◽  
Partial Backlogging ◽  
Order Quantity ◽  
Inventory Policies ◽  
Defective Items ◽  
Proposed Model ◽  
Special Cases ◽  
Total Profit ◽  
Increasing Function

The paper investigates a single period imperfect inventory model with price dependent stochastic demand and partial backlogging. The backorder rate is a nonlinear non-increasing function of the magnitude of shortage. Two special cases are considered assuming that the percentage of defective items follows a truncated exponential distribution and a normal distribution respectively. The optimal order quantity and the optimal mark up value are determined such that the expected total profit of the system is maximized. Numerical example is given to illustrate the proposed model which is compared with the traditional model of perfect stock. Sensitivity analysis is performed to explain the behavior of the proposed model with respect to the key parameters.

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