Optimal joint pricing and lot sizing with fixed and variable capacity |
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| Affiliation: | 1. Research Scholar, Anna University, Chennai 600025, Tamil Nadu, India;2. Department of Mechanical Engineering, PSG College of Technology, Coimbatore, Tamil Nadu, India;3. Department of Mechanical Engineering, College of Engineering, Trivandrum, 695016, Kerala, India;4. Department of Mechanical Engineering, Karunya University, Coimbatore 641 114, Tamil Nadu, India;5. Fluid Mechanics, Thermal Engineering and Multiphase Flow Research Lab (FUTURE), Department of Mechanical Engineering, Faculty of Engineering, King Mongkut''s University of Technology Thonburi, Bangmod, Bangkok 10140, Thailand;1. Department of Mechanical Engineering, Imam Hossein University, Tehran, Iran;2. Department of Mechanical Engineering, University of Kashan, Kashan, Iran;3. Faculty of Mechanical Engineering, Semnan University, Semnan, Iran;1. School of Finance, Nanjing University of Finance and Economics, Nanjing 210023, China;2. School of Economics and Finance, Xian Jiaotong University, Shaanxi 710060, China |
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| Abstract: | This paper examines previously unexplored fixed and variable capacity problems of jointly determining an item's price and lot size for a profit-maximizing firm facing constant but price-dependent demands over a planning horizon. We apply geometric programming to these constrained nonlinear maximization problems with nonconcave objective functions and obtain global optimal solutions. Using Kuhn-Tucker condition, marginal and sensitivity analyses, we investigate model interactions, provide managerial implications on the optimal capacity decisions, and explore the postoptimal behavior of the price, lot size, and capacity expansion and reduction size. Some findings cast interesting insights, different from previous just-in-time management studies without pricing consideration. |
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