Optimal Pricing Policies with an Allowable Discount for Perishable Items under Time-Dependent Sales Price and Trade Credit
Trade credit is generally used by businesses to obtain external funds. This article demonstrates an inventory system from the retailer’s point of view in which (1) the influence of trade credit on expanding small businesses and their consumers is the focus of this research, and (2) the retailer’s on...
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| Format: | Article |
| Language: | English |
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MDPI AG
2022-06-01
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| Series: | Mathematics |
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| Online Access: | https://www.mdpi.com/2227-7390/10/11/1948 |
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| author | Mrudul Y. Jani Manish R. Betheja Amrita Bhadoriya Urmila Chaudhari Mohamed Abbas Malak S. Alqahtani |
| author_facet | Mrudul Y. Jani Manish R. Betheja Amrita Bhadoriya Urmila Chaudhari Mohamed Abbas Malak S. Alqahtani |
| author_sort | Mrudul Y. Jani |
| collection | DOAJ |
| description | Trade credit is generally used by businesses to obtain external funds. This article demonstrates an inventory system from the retailer’s point of view in which (1) the influence of trade credit on expanding small businesses and their consumers is the focus of this research, and (2) the retailer’s on-hand inventory follows the non-instantaneous deterioration. (3) To maximize profit, the demand is disclosed, which is based on not just the sales price, but also on cumulative demand, which indicates saturation and diffusion. (4) The product’s initial price and the permitted discount rate at the time of deterioration are considered to be time-dependent functions of the sales price. In the absence of deterioration, the item is sold at a constant rate, and whenever deterioration occurs, the sales price is assumed to be an exponential function of the discount variable. The main aim is to optimize the total profit of the retailer in terms of cycle time and sales price. The traditional algorithm of optimization is used to address the optimization problem. Finally, the theoretical results are validated by solving three numerical illustrations and conducting a sensitivity analysis of the main factors resulting from the following managerial implications: (1) credit period provides the maximum profit margin of any financing method, and (2) an increase in the initial rate of demand raises sales price while increasing overall profit significantly. |
| first_indexed | 2024-03-10T01:05:09Z |
| format | Article |
| id | doaj.art-1e65b90d27f743f1a51fe6b6134f9509 |
| institution | Directory Open Access Journal |
| issn | 2227-7390 |
| language | English |
| last_indexed | 2024-03-10T01:05:09Z |
| publishDate | 2022-06-01 |
| publisher | MDPI AG |
| record_format | Article |
| series | Mathematics |
| spelling | doaj.art-1e65b90d27f743f1a51fe6b6134f95092023-11-23T14:27:28ZengMDPI AGMathematics2227-73902022-06-011011194810.3390/math10111948Optimal Pricing Policies with an Allowable Discount for Perishable Items under Time-Dependent Sales Price and Trade CreditMrudul Y. Jani0Manish R. Betheja1Amrita Bhadoriya2Urmila Chaudhari3Mohamed Abbas4Malak S. Alqahtani5Department of Applied Sciences, Faculty of Engineering and Technology, Parul University, Vadodara 391760, IndiaDepartment of Applied Sciences, Faculty of Engineering and Technology, Parul University, Vadodara 391760, IndiaDepartment of Applied Mathematics, ASET, Amity University, Gwalior 474011, IndiaGovernment Polytechnic Dahod, Dahod 389151, IndiaElectrical Engineering Department, College of Engineering, King Khalid University, Abha 61421, Saudi ArabiaComputer Engineering Department, College of Computer Science, King Khalid University, Abha 61421, Saudi ArabiaTrade credit is generally used by businesses to obtain external funds. This article demonstrates an inventory system from the retailer’s point of view in which (1) the influence of trade credit on expanding small businesses and their consumers is the focus of this research, and (2) the retailer’s on-hand inventory follows the non-instantaneous deterioration. (3) To maximize profit, the demand is disclosed, which is based on not just the sales price, but also on cumulative demand, which indicates saturation and diffusion. (4) The product’s initial price and the permitted discount rate at the time of deterioration are considered to be time-dependent functions of the sales price. In the absence of deterioration, the item is sold at a constant rate, and whenever deterioration occurs, the sales price is assumed to be an exponential function of the discount variable. The main aim is to optimize the total profit of the retailer in terms of cycle time and sales price. The traditional algorithm of optimization is used to address the optimization problem. Finally, the theoretical results are validated by solving three numerical illustrations and conducting a sensitivity analysis of the main factors resulting from the following managerial implications: (1) credit period provides the maximum profit margin of any financing method, and (2) an increase in the initial rate of demand raises sales price while increasing overall profit significantly.https://www.mdpi.com/2227-7390/10/11/1948discountdynamic rate of demandnon-instantaneous deteriorationtime-varying sales pricetrade credittime-dependent holding cost |
| spellingShingle | Mrudul Y. Jani Manish R. Betheja Amrita Bhadoriya Urmila Chaudhari Mohamed Abbas Malak S. Alqahtani Optimal Pricing Policies with an Allowable Discount for Perishable Items under Time-Dependent Sales Price and Trade Credit Mathematics discount dynamic rate of demand non-instantaneous deterioration time-varying sales price trade credit time-dependent holding cost |
| title | Optimal Pricing Policies with an Allowable Discount for Perishable Items under Time-Dependent Sales Price and Trade Credit |
| title_full | Optimal Pricing Policies with an Allowable Discount for Perishable Items under Time-Dependent Sales Price and Trade Credit |
| title_fullStr | Optimal Pricing Policies with an Allowable Discount for Perishable Items under Time-Dependent Sales Price and Trade Credit |
| title_full_unstemmed | Optimal Pricing Policies with an Allowable Discount for Perishable Items under Time-Dependent Sales Price and Trade Credit |
| title_short | Optimal Pricing Policies with an Allowable Discount for Perishable Items under Time-Dependent Sales Price and Trade Credit |
| title_sort | optimal pricing policies with an allowable discount for perishable items under time dependent sales price and trade credit |
| topic | discount dynamic rate of demand non-instantaneous deterioration time-varying sales price trade credit time-dependent holding cost |
| url | https://www.mdpi.com/2227-7390/10/11/1948 |
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