Time-dependent demand and utility-sensitive sale price in a retailing system

In this paper, we address a variation of economic order quantity model where product has an expiration date and its demand is a descending function of product's lifetime. In addition, sale price of product is considered as a descending function of the product's lifetime which is derived from its continuous utility deterioration. This model is useful for retailing managers in dealing with perishable goods such as vegetables, fruits, etc. Because of the parameters-dependent structure of the developed model, the closed form of the optimal ordering policy may not be derived. General optimization on the objective function can be done by any mathematical optimization software or numerical methods. Effectiveness of the proposed model is presented through several numerical examples and sensitivity of the key parameters of the model is analyzed.