Abstract.

This paper deals with an inventory system of dynamic pricing and stock control of non-instantaneous deteriorating items. To hold dynamic nature of the problem, the price is modeled as a time-dependent function of the initial selling price and the discount rate. Demand depends on price and advertisement. The product is sold at the initial price value in the time period with no deterioration; afterward, it is exponentially discounted to boost customers demand. Inspired by the significant impact of promotion on encouraging sales, the demand rate is linked to the frequency of advertisement in each cycle time as well. The retailer invests investments on advertisement and preservation technology to preserve the item. The objective is to optimize the total profit of the retailer with respect to advertisement, selling price, cycle time and investment for preservation technology. Effect of advertisement is analyzed. If the retailer use preservation technology and advertisement then he can earns more profit. The model is supported with numerical examples and also established best scenario of the model. Sensitivity analysis is done to deduce managerial insights.

Keywords:

dynamic selling price, non-instantaneous deterioration rate, effect of advertisement, preservation technology investment