Authors :
Babitha. N; T.P.M. Pakkala
Volume/Issue :
Volume 8 - 2023, Issue 3 - March
Google Scholar :
https://bit.ly/3TmGbDi
Scribd :
https://t.ly/2Ak3
DOI :
https://doi.org/10.5281/zenodo.8000645
Abstract :
One of the methods of taking optimal
decisions under uncertainty is a probabilistic approach.
Under the situation of one-time discount offer with
uncertain ending duration, the optimal order sizes need
not remain same. The cash flow that occurs at different
time point depends on order sizes very much. The
optimal order sizes will also depends on probability of
discount closes before next replacement. The objective of
the paper is to determine an optimal ordering policy
when a discounted price is offered over a temporary
period and it is for a random duration. The paper
discusses the method of finding optimal order quantities
and reorder levels to maximize the net present value of
the profit. A comparison of policies based on net present
value (NPV) concept and with that of the absence of
NPV is also studied. A sensitivity analysis based on
inventory parameters is carried out.
Keywords :
Dynamic inventory policies, temporary price discount, special order, net present value, profit function, price increase.
One of the methods of taking optimal
decisions under uncertainty is a probabilistic approach.
Under the situation of one-time discount offer with
uncertain ending duration, the optimal order sizes need
not remain same. The cash flow that occurs at different
time point depends on order sizes very much. The
optimal order sizes will also depends on probability of
discount closes before next replacement. The objective of
the paper is to determine an optimal ordering policy
when a discounted price is offered over a temporary
period and it is for a random duration. The paper
discusses the method of finding optimal order quantities
and reorder levels to maximize the net present value of
the profit. A comparison of policies based on net present
value (NPV) concept and with that of the absence of
NPV is also studied. A sensitivity analysis based on
inventory parameters is carried out.
Keywords :
Dynamic inventory policies, temporary price discount, special order, net present value, profit function, price increase.
