Construction of a model towards EOQ and pricing strategy for gradually obsolescent products

Due to the rapid advance of technology, manufacturers’ marketing models and quickly changing consumer tastes, products such as apparel, clothing accessories and consumer electronics are likely to face the problem of short product life cycles. This study deals with the problem of determining order qu...

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Vydáno v:Applied mathematics and computation Ročník 217; číslo 16; s. 6926 - 6933
Hlavní autoři: Wang, Kuo-Hsien, Tung, Che-Tsung
Médium: Journal Article
Jazyk:angličtina
Vydáno: Amsterdam Elsevier Inc 15.04.2011
Elsevier
Témata:
Calculus of variations and optimal control
Demand
Electronics
EOQ
Exact sciences and technology
Gain
Gradually obsolescent products
Marketing
Mathematical analysis
Mathematical models
Mathematics
Numerical analysis
Numerical analysis. Scientific computation
Numerical methods in mathematical programming, optimization and calculus of variations
Numerical methods in optimization and calculus of variations
Optimization
Pricing
Pricing strategy
Sciences and techniques of general use
Strategy
Pricing strategy
Gradually obsolescent products
EOQ
Numerical analysis
Applied mathematics
Pricing
Optimization method
Variational calculus
Mathematical programming
ISSN:0096-3003, 1873-5649
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Popis
Shrnutí:Due to the rapid advance of technology, manufacturers’ marketing models and quickly changing consumer tastes, products such as apparel, clothing accessories and consumer electronics are likely to face the problem of short product life cycles. This study deals with the problem of determining order quantity and multi-discount selling prices for these types of gradually obsolescent products, in which two novel proposals are presented as follows: (1) without considering any exogenous factors that could affect demand, we develop a time-dependent demand model that appropriately portrays an integrated demand behavior associated with the characteristic of obsolescence; (2) we then treat the selling price as an exogenous factor influencing demand and, referring to the linear demand D = α − βp, the effect that “the increase of demand due to price change is linearly correlated with the difference between two consecutive selling prices” is incorporated, so as to make the demand model be a function of both time and selling price. Afterwards, optimization models are hereby formulated to predetermine pricing strategy with a limited number of price changes by maximizing retailer’s profit. As a result, numerical examples illustrate that the multi-discount model indeed provides higher total profit than a single discount one. This is presented along with the result analysis conducted to gain some managerial insights.
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ISSN:0096-3003
1873-5649
DOI:10.1016/j.amc.2011.01.100