This paper presents an economic order quantity (EOQ) model that integrates the product pricing and order sizing decisions to maximize profit. The Kuhn-Tucker conditions are used to determine the optimal solution under conditions of storage space and inventory investment limitations. The aim of this paper is to explore the effect of relating the pricing and order sizing decisions on the optimal solution. Such a relationship, although it exists in real situations, has long been ignored in the classical EOQ model.
ASJC Scopus subject areas
- Computer Science(all)