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Journal of Industrial Engineering
Volume 2013 (2013), Article ID 709083, 7 pages
http://dx.doi.org/10.1155/2013/709083
Research Article

Joint Optimal Pricing and Inventory Control for Deteriorating Items under Inflation and Customer Returns

Industrial Engineering Department, Kharazmi University, University Square, Dr. Beheshti Street, Karaj 31979-37551, Tehran, Iran

Received 27 October 2012; Accepted 25 December 2012

Academic Editor: Ilkyeong Moon

Copyright © 2013 Maryam Ghoreishi et al. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

This paper studies the effect of inflation and customer returns on joint pricing and inventory control for deteriorating items. We adopt a price and time dependent demand function, also the customer returns are considered as a function of both price and demand. Shortage is allowed and partially backlogged. The main objective is determining the optimal selling price, the optimal replenishment cycles, and the order quantity simultaneously such that the present value of total profit in a finite time horizon is maximized. An algorithm has been presented to find the optimal solution. Finally, we solve a numerical example to illustrate the solution procedure and the algorithm.