TY - JOUR
T1 - A heuristic procedure for determining ordering and price-discount policies for commodities with two-period perishability
AU - Gupta, D.
AU - Dai, Z.
PY - 1991/5
Y1 - 1991/5
N2 - In this paper, the problem of jointly setting order quantity of fresh items and discount price of one-period old items is modelled as a stochastic dynamic program for commodities that perish in two periods. It is solved using a heuristic procedure that decouples inventory decisions in any two consecutive periods by assuming a salvage value of leftover fresh items that is also the price paid for the entering stock of one-period-old items. For an assumed salvage value, the single period expected profit maximizing ordering - discount policy pair is identified. The m-periods planning problem is then solved by sequentially solving m single period problems. Numerical examples reveal some valuable insights about the inter-dependencies between order quantity and discount price. The percent discount is found to be insensitive to the assumed salvage value.
AB - In this paper, the problem of jointly setting order quantity of fresh items and discount price of one-period old items is modelled as a stochastic dynamic program for commodities that perish in two periods. It is solved using a heuristic procedure that decouples inventory decisions in any two consecutive periods by assuming a salvage value of leftover fresh items that is also the price paid for the entering stock of one-period-old items. For an assumed salvage value, the single period expected profit maximizing ordering - discount policy pair is identified. The m-periods planning problem is then solved by sequentially solving m single period problems. Numerical examples reveal some valuable insights about the inter-dependencies between order quantity and discount price. The percent discount is found to be insensitive to the assumed salvage value.
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U2 - 10.1016/0167-188X(91)90031-V
DO - 10.1016/0167-188X(91)90031-V
M3 - Article
AN - SCOPUS:0026157871
SN - 0167-188X
VL - 21
SP - 177
EP - 190
JO - Engineering Costs and Production Economics
JF - Engineering Costs and Production Economics
IS - 2
ER -