An inventory system with stock-dependent, price-sensitive demand rate

Abstract

This article analyses an inventory system where the demand rate is influenced by both displayed stock level and selling price. A finite period system has been considered under multi-replenishment scenario. Optimal selling price and the optimal order quantities have been treated as decision variables. An algorithmic solution procedure is provided on the basis of some observations and is illustrated by some numerical examples. A sensitivity analysis has been performed to study the effects of changes of the demand parameters on the net profit.