14. Effects of Pre- and Post-Deterioration Price Discounts on Selling Price in Formulation of an Ordering Policy for an Inventory System: A Study

In present times, one of the promotional tools is offering a rebate on retail amount for raising the market needs of a product. Also, different discount rates are offered depending upon quality/originality/expediency. A non-deteriorating product maintains its quality/original conditions throughout the planning horizon. A deteriorating product may be affected by deterioration at the time of replenishment (instantaneous deterioration) or may be after some time (non-instantaneous). Retailer may offer different price discounts in each case. In this chapter, optimal ordering policies are discussed when retailer offers different price discounts to his customers, before and after deterioration starts. Moreover, the demand for a product is considered price sensitive. Pre-deterioration discount is considered to be smaller than the post-deterioration discount as per the trend. Four different situations are formulated and illustrated with support of numerical examples. Sensitivity analysis is performed to present bureaucratic insights.