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Two-tiered pricing and ordering for non-instantaneous deteriorating items under trade credit

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Abstract

We develop an economic order quantity model for non-instantaneous deteriorating items with price dependent demand and trade credit. Our objective is to determine the optimal two-tiered pricing and ordering policies, where the two-tiered pricing means that the prices for the non-deteriorating period and the deteriorating period are different. We derive the expressions of the total profit under different situations and propose an algorithm to derive the optimal solutions. Through numerical analysis, we illustrate that the two-tiered pricing is better than one-tiered pricing. Some other managerial insights are also derived by the numerical examples.

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Authors and Affiliations

  1. Department of Industrial Management, National Taiwan University of Science and Technology, Taipei, Taiwan, ROC

    Yu-Chung Tsao, Hui-Ping Fang & Pei-Ling Lee

  2. Sino-US Global Logistic Institution, Shanghai Jiao Tong University, Shanghai, People’s Republic of China

    Qinhong Zhang

Authors
  1. Yu-Chung Tsao
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  2. Qinhong Zhang
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  3. Hui-Ping Fang
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  4. Pei-Ling Lee
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Correspondence to Qinhong Zhang.

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Tsao, YC., Zhang, Q., Fang, HP. et al. Two-tiered pricing and ordering for non-instantaneous deteriorating items under trade credit. Oper Res Int J 19, 833–852 (2019). https://doi.org/10.1007/s12351-017-0306-9

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  • DOI: https://doi.org/10.1007/s12351-017-0306-9

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