Inventory model with the consideration of pricing, product substitution and value deterioration

Felix T.S. Chan, J. H. Ruan, A. H. Tai, S. H. Chung, A. E.E. Eltoukhy

Research output: Chapter in book / Conference proceedingConference article published in proceeding or bookAcademic researchpeer-review

Abstract

Nowadays, due to the radical development for the e-commerce means, it becomes a trend to buy the products, especially the electronic products, directly from the manufacturers instead of retailers. It is commonly known that each entity in the market has the autonomy to deciding both the production/inventory plan and the pricing plan. Nevertheless, the existing research focuses either on the production planning or pricing. Using such approach can generate optimal solution for production and pricing, but the global optimal solution for integrated production planning and pricing is not guaranteed. Investigating the literature reveals that there are two literature review studies indicate that it is of great important to study the integrated model in production and inventory control problem with perishable and substitutable product. Therefore, this study aims to discuss the aforementioned problem by solving an inventory model with the consideration of pricing, product substitution and value deterioration. For this purpose, we propose a Mixed Integer Linear Programming model to represent our inventory model and develop a method to find out the best pricing strategy and its corresponding production plan. To demonstrate the validity of the proposed model, we present an example, the results reveal that our model can efficiently handle the proposed problem.

Original languageEnglish
Title of host publicationAdvances in Production Management Systems. Production Management for Data-Driven, Intelligent, Collaborative, and Sustainable Manufacturing - IFIP WG 5.7 International Conference, APMS 2018, Proceedings
EditorsDimitris Kiritsis, Ilkyeong Moon, Jinwoo Park, Gyu M. Lee, Gregor von Cieminski
PublisherSpringer New York LLC
Pages450-456
Number of pages7
ISBN (Print)9783319997032
DOIs
Publication statusPublished - 1 Jan 2018
EventIFIP WG 5.7 International Conference on Advances in Production Management Systems, APMS 2018 - Seoul, Korea, Republic of
Duration: 26 Aug 201830 Aug 2018

Publication series

NameIFIP Advances in Information and Communication Technology
Volume535
ISSN (Print)1868-4238

Conference

ConferenceIFIP WG 5.7 International Conference on Advances in Production Management Systems, APMS 2018
Country/TerritoryKorea, Republic of
CitySeoul
Period26/08/1830/08/18

Keywords

  • Inventory control
  • Product pricing
  • Product substitution
  • Production planning

ASJC Scopus subject areas

  • Information Systems and Management

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