Combined optimal price and optimal inventory ordering policy with income elasticity

Abstract EN

In the present paper, the effect of income elasticity on demand has been considered and the buyers optimal special order quantity and optimal time has been determined, when supplier reduces sale price then buyer may offer a discount to push his sale to increase his profit margin.

Income elasticity effect in inventory analysis has been introduced to obtain the gain equation to find the optimal special order quantity and profit associated with it when remnant inventory is zero.

The profit and optimal order quantity are also derived when remnant inventory is finite.

The cost of saving was also determined when due to inflation rise in the sale price is imminent.

Finally optimal inventory ordering policy has been discussed to get maximum profit.