Retailer’s optimal pricing and replenishment policy for new product and buy back policy for used product with price and time dependent demand and shortages

Abstract

The new age consumer, manufacturers and government is aware about the hazardous impact of manufacturing on the environment and limited assets are factors which are considered while buying a product. As an outcome, consumers have demonstrated their enthusiasm to purchase utilized or restored items. We looked at a scenario in this article where a retailer collects and resells old products to customers in addition to selling new products. Detailed formulation and discussion are given to the optimum price and ordering strategies for new products as well as the optimum buyback strategy for used products. The demand of the products is the time and price sensitive. Additionally, Shortages are permitted and there is a partial backlog. Maximizing a retailer’s total profit per time unit while determining the best selling price and quantity to place an order for new products and the best amount to buy back for used products is the objective. The numerical example demonstrates the framework and sensitivity evaluations are carried out on the significant parameters.