Pricing and inventory planning for non-instantaneous deteriorating products with greening investment: A case study in beef industry

This paper studies the problem of pricing and inventory planning for a vendor of non-instantaneous deteriorating items under partially backlogged shortages with greening investment. The demand of customers and inventory control variables are affected by greening programs. The primary objective of this paper is to determine the optimal sales price, replenishment schedule, and order quantity per in-ventory cycle under different greenness levels, which will help maximize the vendor's total profit. The problem is formulated as a non-linear optimization model in which an analytical approach is applied in order to find the optimal solution. Using several mathematical theorems, it has been proven that the optimal solution not only exists but also is unique. In order to show the efficacy of the proposed model, a real case study in the round beef industry is analyzed. Furthermore, a sensitivity analysis is conducted to help find managerial insights. The results indicate the range of greening cost that positively influences the demand and total profit for the vendor. Additionally, the vendor's inventory planning is designed and differentiated according to the demand function and greenness level. (c) 2021 Elsevier Ltd. All rights reserved.

Automated summary

This paper examines the problem of pricing and inventory planning for a vendor of non-instantaneous deteriorating items under partially backlogged shortages with greening investment. By formulating a non-linear optimization model and utilizing analytical methods, the study finds the optimal solution and explores the impact of greening costs on demand and total profit for the vendor.