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Optimal replenishment and stocking strategies for inventory mechanism with a dynamically stochastic short-term price discount

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Abstract

This paper considers an inventory mechanism with a non-deterministic short-term price discount. In the mechanism, the supplier has a tendency to offer retailers a short-term price discount for a future occasion. Subsequently, when the discount occurs, the discount stock would start to reduce gradually. Therefore the discount might terminate ahead of schedule once the discount stock is depleted, which means that the discount possibility will gradually decrease from 1 ever after the start of the discount. For this system, to maximize the retailer’s profit, we establish an optimal replenishment and stocking strategies model. Based on the retailer’s cost-benefit analysis, we present a solution method for the model and provide an optimal ordering policy to the retailer. The given numerical experiments illustrate the validity of the model.

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Acknowledgements

The authors are in debt to two anonymous referees for numerous insightful comments and suggestions, which have greatly improved the paper.

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Authors and Affiliations

  1. School of Management Science, Qufu Normal University, Rizhao, 276800, Shandong, China

    Yiju Wang, Hengxia Gao & Wei Xing

Authors
  1. Yiju Wang
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  2. Hengxia Gao
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  3. Wei Xing
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Corresponding authors

Correspondence to Yiju Wang or Wei Xing.

Additional information

This work is supported by the Natural Science Foundation of China (11671228, 71471101) and Shandong Provincial Natural Science Foundation (ZR2015GZ008).

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Wang, Y., Gao, H. & Xing, W. Optimal replenishment and stocking strategies for inventory mechanism with a dynamically stochastic short-term price discount. J Glob Optim 70, 27–53 (2018). https://doi.org/10.1007/s10898-017-0522-0

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  • DOI: https://doi.org/10.1007/s10898-017-0522-0

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