Inventory models for joint pricing and greening effort decisions with discounts

Purpose This paper aims to develop efficient decision support tools for a firm’s environment protection by using greening effort while yet improving profitability by utilizing pricing and inventory decisions with discount consideration. Design/methodology/approach This study proposed a mathematical model for price- and greening effort-dependent demand rate with discount considerations. Later, the mathematical model is extended to the situation in which the demand rate is also dependent on the stock level, in addition to the price and greening effort. Efficient solution methodologies are developed for finding the optimal solution to the proposed models. Findings Simple yet elegant models are proposed to mimic real-life applications. Structural properties of the models are explored to outline efficient algorithms with quantity discounts. Research limitations/implications The paper considers monopoly and assumes deterministic demand. Only a more commonly observed all-units discount scheme is studied. Practical implications The models provide decision support tools for firms in pursuit of joint profit maximization and environment consciousness goals. Social implications The study develops environment-friendly approaches for inventory management and improving the profitability alike. Originality/value This study is among the first to consider environmental protection with an investment in greening effort along with inventory management and pricing decision. The study also explored the effect of all-unit quantity discounts.

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