A single period inventory problem with quadratic demand distribution under the influence of marketing policies

Abstract EN

A single-period inventory problem is considered where demand is taken to be quadratic in nature.

The model contains usual ingredients of a newsboy problem : sale price, purchase cost, salvage value and shortage cost.

In addition, there is a cost per unit of marketing effort, and the demand distribution is stochastically increasing in that effort.

It is assumed that the distribution of demand can be shifted up by an increase in sales effort.

The paper deals with the simultaneous determination of optimal order quantity and sales effort.

The optimum profit associated with optimum marketing effort is also determined.

The sensitivity analysis of the results is provided, to consider variation in optimal order quantity and sales effort with the changes in unit sales price, unit purchase cost, unit salvage value, unit shortage cost and cost per unit of marketing effort.