Pricing and Lot sizing of a Decaying item under Group Dispatching with Time-dependent Demand and Decay Rates

Document Type: Article

Authors

1 School of Industrial Engineering, College of Engineering, University of Tehran, Tehran, Iran

2 Department of Industrial Engineering, Islamic, Azad University, South Tehran Branch

Abstract

Determining appropriate inventory and pricing policies is an important issue in scientific and industrial researches. Here an inventory control model of a decaying item with zero lead time is studied. Two mathematical models under different assumptions are developed. In the first model deterioration rate is time-dependent and demand rate is price sensitive while in the second model deterioration rate is constant and demand rate is time- and price-dependent. Aim of this research is optimizing total cost by deriving decision variables such as dispatch cycle length, order quantity and wholesale price. To optimize the total cost a shipment group dispatching policy is used.

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