RT info:eu-repo/semantics/article
T1 Profitability Index Maximization in an Inventory Model with a Price- and Stock-Dependent Demand Rate in a Power-Form
A1 Pando, Valentín
A1 San-José, Luis A.
A1 Sicilia, Joaquín
A1 Alcaide-López-de-Pablo, David
K1 inventory models
K1 price- and stock-dependent demand
K1 profitability index maximization
K1 isoelastic price-dependent demand
AB This paper presents the optimal policy for an inventory model where the demand rate potentially depends on both selling price and stock level. The goal is the maximization of the profitability index, defined as the ratio income/expense. A numerical algorithm is proposed to calculate the optimal selling price. The optimal values for the depletion time, the cycle time, the maximum profitability index, and the lot size are evaluated from the selling price. The solution shows that the inventory must be replenished when the stock is depleted, i.e., the depletion time is always equal to the cycle time. The optimal policy is obtained with a suitable balance between ordering cost and holding cost. A condition that ensures the profitability of the financial investment in the inventory is established from the initial parameters. Profitability thresholds for several parameters, including the scale and the non-centrality parameters, keeping all the others fixed, are evaluated. The model with an isoelastic price-dependent demand is solved as a particular case. In this last model, all the optimal values are given in a closed form, and a sensitivity analysis is performed for several parameters, including the scale parameter. The results are illustrated with numerical examples.
SN 2227-7390
YR 2021
FD 2021
LK https://uvadoc.uva.es/handle/10324/72953
UL https://uvadoc.uva.es/handle/10324/72953
LA eng
NO Mathematics 2021, 9, 1157
NO Producción Científica
DS UVaDOC
RD 22-dic-2024