Joint Price and Reorder Point Determination for Profit Maximization
- Manuel Cardós Carboneras 1
- Fuente Aragón, María Victoria de la 2
- Lorenzo Ros-McDonnell 2
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1
Universidad Politécnica de Valencia
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2
Universidad Politécnica de Cartagena
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- Castro, Rodolfo de (ed. lit.)
- Gerusa Giménez (ed. lit.)
Publisher: Springer Suiza
ISBN: 978-3-030-44529-4, 978-3-030-44530-0
Year of publication: 2020
Pages: 207-216
Congress: International Conference on Industrial Engineering and Industrial Management (12. 2018. Girona)
Type: Conference paper
Abstract
This paper proposes a novel, exact procedure for the joint determination of the reorder point and the price, given that demand is a power function of price and the objective is profit maximization. Some examples illustrate the effect of elasticity on the existence of a profit optimum; in fact just elastic demand items present such optima. The procedure presented in this paper overcomes others in the literature because an exact profit function is used instead of an approximate one.