Profitability Index Maximization in an Inventory Model with a Price- and Stock-Dependent Demand Rate in a Power-Form

This paper presents the optimal policy for an inventory model where demand rate potentially depends on both selling price and stock level. The goal is maximization of profitability index, defined as ratio income/expense. A numerical algorithm proposed to calculate price. values depletion time, cycle maximum lot size are evaluated from solution shows that must be replenished when depleted, i.e., time always equal time. obtained with a suitable balance between ordering cost holding cost. condition ensures financial investment in established initial parameters. Profitability thresholds several parameters, including scale non-centrality keeping all others fixed, evaluated. isoelastic price-dependent solved particular case. In this last model, given closed form, sensitivity analysis performed parameter. results illustrated examples.