A multiple objective approach for joint ordering and pricing planning problem with stochastic lead times

Authors

1 Department of Industrial Engineering, Alzahra University, Tehran, Iran

2 Department of Industrial Engineering, Amirkabir University of Technology, Tehran, Iran

Abstract

The integration of marketing and demand with logistics and inventories (supply side of companies) may cause
multiple improvements; it can revolutionize the management of the revenue of rental companies, hotels, and
airlines. In this paper, we develop a multi-objective pricing-inventory model for a retailer. Maximizing the retailer's
profit and the service level are the objectives, and shortage is allowed. We present the model under stochastic lead
time with uniform and exponential distributions. Since pricing is important and influences demand, the demand is
considered as a general function of price. The multiple-objective optimization model is solved using the weighting
method as well as the L-P metric method. Concerning the properties of a nonlinear model, a genetic algorithm is
taken into account to find the optimal solutions for the selling price, lot size, and reorder point. Finally, numerical
examples with sensitivity analysis regarding key parameters are provided.

Keywords