Title: Optimal pricing and advertisement with allowable shortages for non-instantaneous deteriorating items under inflation and trade credit

Authors: Chirag R. Trivedi; Mrudul Y. Jani; D.C. Joshi; Manish R. Betheja

Addresses: Department of Applied Sciences, Faculty of Engineering and Technology, Parul University, Vadodara-391760, Gujarat, India ' Department of Applied Sciences, Faculty of Engineering and Technology, Parul University, Vadodara-391760, Gujarat, India ' Department of Mathematics, Veer Narmad South Gujarat University, Surat-7, Gujarat, India ' Department of Applied Sciences, Faculty of Engineering and Technology, Parul University, Vadodara-391760, Gujarat, India

Abstract: In recent business transactions, the policy of trade credit is usually used to improve product demand and maximise revenue by earning interest. Furthermore, advertisement is a tool that assists the retailer in attracting more consumers. Moreover, demand for products varies depending on the price and while managing inventory most important thing is product deterioration. The current time value of price is calculated at constant inflation rate. The following points are considered: 1) trade credit policy between supplier and retailer; 2) the product demand depends on sales price and advertisement; 3) the product deterioration is non-instantaneous; 4) the current time value of money is calculated at constant inflation rate, and shortages are allowed. The main aim to find the optimality of total profit function with respect to cycle time inventory vanish time, sales price, and frequency of advertisement. A sensitivity analysis of significant parameters and some important managerial implications are analysed.

Keywords: advertisement; inflation; non-instantaneous deterioration; pricing; shortages; trade credit policy.

DOI: 10.1504/IJPM.2024.135154

International Journal of Procurement Management, 2024 Vol.19 No.1, pp.122 - 158

Received: 25 Jul 2022
Accepted: 16 Oct 2022
Published online: 01 Dec 2023 *

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