In this paper, we discussed the effects of discount price on demand and profit in a diminishing market. A production plan has been suggested for an imperfect production system. Here, demand is considered to be price sensitive and negative power function of the selling price. This problem is solved by optimization, using the Hessian matrix of order three. The main objective is to find the optimal excepted average profit, optimal selling price, discount rate, backorder level, and lot-size. The recommendations are provided to offer a price discount for limited sale season on different occasions. | Yugoslav Journal of Operations Research xx (zz), Number nn, zzz–zzz DOI: Decision Makings in Discount Pricing Policy for Imperfect Production System Uttam Kumar KHEDLEKAR Department of Mathematics and Statistics, Dr. Harisingh Gour Vishwavidyalaya, Sagar . India (A Central University) e-mail:uvkkcm@ Ram Kumar TIWARI Department of Mathematics and Statistics, Dr. Harisingh Gour Vishwavidyalaya, Sagar . India (A Central University) Received: June 2018 / Accepted: October 2018 Abstract:In this paper, we discussed the effects of discount price on demand and profit in a diminishing market. A production plan has been suggested for an imperfect production system. Here, demand is considered to be price sensitive and negative power function of the selling price. This problem is solved by optimization, using the Hessian matrix of order three. The main objective is to find the optimal excepted average profit, optimal selling price, discount rate, backorder level, and lot-size. The recommendations are provided to offer a price discount for limited sale season on different occasions. A numerical example is presented to validate the model and is graphically illustrated accordingly. Keywords: Inventory, Dynamic pricing, Price-discount dependent demand, Optimal price settings, Imperfect item, Rework, Shortage, Partial backlogging. MSC: 90B05, 90B30, 90B50. 1. Introduction Inventory management plays a significant role as it ensures product quality to be maintained and effectively tackles transactions related to consumer goods. Inventory management is an essential requirement that facilitates smooth operation of business affairs in retail stores, warehouses and production systems. Pricing 2 . Khedlekar, et al. / Decision Makings in Discount Pricing Policy for policy plays a vital role to maintain inventory and it also influences demand of the product. Production planning is another aspect that .
