A Discrete Inventory Model with Price Discount Based on Time

Arpita N. Shah

Abstract: We present an inventory model in which the items are initially sold at a regular price p1 per unit, and after a specified duration T0, the unsold items, if any, are sold at a reduce price p2. It is assumed that this price reduction does not affect the demand rate for the items. The demand is assumed to be Poisson and holding cost is incurred only for the period during which the inventory items are maintained in stock. As the closed form expression for optimal order quantity is not obtainable, we present a program in C++ to obtain optimal order quantity and the associated minimum cost

Keywords: Inventory model, Value deteriorating items, Poisson demand, Price discount