Optimal Pricing and Ordering Policy under Permissible Delay in Payments

Abstract

This study develops an inventory model to determine an optimal cycle time and optimal total annual profit for non-deteriorating items under permissible delay in payments. Mathematical models have been derived for obtaining the optimal cycle time and optimal price, so that the annual total profit is maximized. This paper also develops the model by considering particular cases (A) and (B) respectively. We obtain price and lot size simultaneously when supplier offers a permissible delay in payments. The demand rate is assumed to be a function of price and time. Finally, a numerical example is given to illustrate the proposed model.

Key words: Pricing, Inventory, Permissible delay, Non- deterioration, Finance, Quantity