Optimal ordering policies for deteriorating items with a return period and price-dependent demand under two-phase advance sales

In this article, we establish an inventory model for deteriorating items with a return period and price-dependent demand for the retailer who offers two-phase advance sales to his/her customers. The replenishment cycle is divided into two sales periods: one is the two-phase advance sales period, and the other is the spot sales period. Before customers with reservations receive their orders, they may cancel the order. On the other hand, when the customers receive the order, they can make a request to return products for any reason during the return period. We provide an easy-to-use method to obtain the optimal selling price and the optimal sales period to achieve the retailer’s maximum total profit. Finally, we give numerical examples to illustrate the solution procedure. We perform a sensitivity analysis to investigate the effect of changes of some main parameter values on the optimal solution and provide an economic interpretation.

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