In the traditional Economic Order Quantity model, it is assumed that the unit purchasing price is constant. However, the suppliers may adjust the unit price due to some factors in the real world that may affect the retailers to change the ordering policy. When the retailers decide to make large special order quantities, they need to consider if the warehouse capacity is enough or not. Furthermore, the length of lead time is longer than before. This may lead to an inventory shortage cost. In addition, the physical goods will deteriorate in daily life such as medicine, volatile liquids, fruits, and vegetables. Consequently, the loss must be taken into account while developing the inventory models for such goods.
The paper investigates the effect of unit purchasing price change on retailer’s optimal ordering quantity policy. We formulate the inventory model under the warehouse capacity limited, the length of lead time linked to ordering quantity, limited ordering quantity and deteriorating items. Chapter 1 covers the motivation and objectives of this research. Meanwhile, we also survey the related literature and provide a research framework. In Chapter 2, we establish an optimal ordering policy model in response to a temporary sales price based on limited capacity of the retailer’s warehouse. Chapter 3 develops an inventory model with temporary price discount when lead time is linked to the order quantity. In Chapter 4, we explore the retailer’s replenishment policy based on limited special order quantities and assume the rate of decay of goods is constant. In this dissertation, we develop several algorithms to find the optimal ordering policies and provide numerical examples to illustrate the solution procedure. Moreover, this research also conducts a sensitivity analysis with the parameters of the models. Finally, Chapter 5 provides the conclusions of this research and topics for future research.