The effect of rebate value and selling price-dependent demand for a four-level production manufacturing system

Author:

Mishra Umakanta1,Mashud Abu Hashan Md23,Roy Sankar Kumar4,Uddin Md Sharif56

Affiliation:

1. Department of Mathematics, School of Advanced Sciences, Vellore Institute of Technology, Vellore, 632014, India

2. Department of Mathematics, Hajee Mohammad Danesh Science and Technology University, Dinajpur-5200, Bangladesh

3. School of Engineering and IT, University of New South Wales (UNSW), Canberra, Australia

4. Department of Applied Mathematics with Oceanology and Computer Programming, Vidyasagar University, Midnapore-721102, WB, India

5. Department of Industrial Engineering, Prince Sattam bin Abdulaziz University, Alkharj, KSA, 16273

6. Department of Mathematics, Jahangirnagar University, Savar, Dhaka-1342, Bangladesh

Abstract

<p style='text-indent:20px;'>Price rebate is only permitted when purchases made by the customer exceed a predefined limit and they later buy other items from the purchaser. There are various forms of rebate used by production companies. This study provides a deteriorating inventory model of four-level production rates and derives the rebate-value-based demand with the product selling price under shortages. This model gives preference to optimal replenishment time, ordering quantity, rebate value, and selling price while maximizing total profit. This model first explores and discusses the demand function, which discretely hinges on the selling price of rebate value, followed by discussions on demand based on the selling price. This study proposes a solution through unique propositions and the construction of two algorithms that are suitable for four-level production; this has not yet been explored in-depth in the literature. Illustrative examples and a sensitivity analysis demonstrate the applicability of the proposed algorithms; the customer decides to buy a product that is larger than the minimum suitable for a price rebate and the buyer can then deal with a higher price rebate. The benefit of rebate marketing helps production companies increases conversion rates and encourages customers to purchase goods. This model demonstrates that proposing rebates can consume substantial pricing and inventory inferences and can result in a substantial increase in profit.</p>

Publisher

American Institute of Mathematical Sciences (AIMS)

Subject

Applied Mathematics,Control and Optimization,Strategy and Management,Business and International Management,Applied Mathematics,Control and Optimization,Strategy and Management,Business and International Management

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