Open AccessOptimal pricing and marketing planning for deteriorating items
Author(s) -
Seyed Reza Moosavi Tabatabaei,
Seyed Jafar Sadjadi,
Ahmad Makui
Publication year - 2017
Publication title -
plos one
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.99
H-Index - 332
ISSN - 1932-6203
DOI - 10.1371/journal.pone.0172758
Subject(s) - revenue , production (economics) , supply chain , pricing strategies , production planning , sensitivity (control systems) , product (mathematics) , revenue management , quality (philosophy) , service level , operations research , set (abstract data type) , marketing , business , microeconomics , economics , computer science , mathematics , engineering , philosophy , programming language , geometry , accounting , epistemology , electronic engineering
Optimal pricing and marketing planning plays an essential role in production decisions on deteriorating items. This paper presents a mathematical model for a three-level supply chain, which includes one producer, one distributor and one retailer. The proposed study considers the production of a deteriorating item where demand is influenced by price, marketing expenditure, quality of product and after-sales service expenditures. The proposed model is formulated as a geometric programming with 5 degrees of difficulty and the problem is solved using the recent advances in optimization techniques. The study is supported by several numerical examples and sensitivity analysis is performed to analyze the effects of the changes in different parameters on the optimal solution. The preliminary results indicate that with the change in parameters influencing on demand, inventory holding, inventory deteriorating and set-up costs change and also significantly affect total revenue.