Pricing Policy in an Inventory Model with Green Level Dependent Demand for a Deteriorating Item

Abstract

The goal of this research is to investigate an inventory model for degrading commodities with linear selling prices and nonlinear green level-dependent demand for an item. The pre-payment option with a one-time flat reduction on the product’s selling price is considered here. The governing differential equations are used to mathematically define the model and solve numerically to optimize the model’s average profit. After that, the model is tested using a numerical example, and sensitivity analyses are run to see how changing inventory factors affects the best strategy. The concavity of the objective function is shown graphically with the help of MATLAB software. Finally, some applications of this approach and future scopes are discussed.