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

  • Yu-Chung Tsao
  • Qinhong ZhangEmail author
  • Hui-Ping Fang
  • Pei-Ling Lee
Original Paper

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.

Keywords

Inventory Trade credit Non-instantaneous deterioration Pricing 

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Copyright information

© Springer-Verlag Berlin Heidelberg 2017

Authors and Affiliations

  • Yu-Chung Tsao
    • 1
  • Qinhong Zhang
    • 2
    Email author
  • Hui-Ping Fang
    • 1
  • Pei-Ling Lee
    • 1
  1. 1.Department of Industrial ManagementNational Taiwan University of Science and TechnologyTaipeiTaiwan, ROC
  2. 2.Sino-US Global Logistic InstitutionShanghai Jiao Tong UniversityShanghaiPeople’s Republic of China

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