Advances in Operations Research
Volume 2012 (2012), Article ID 385371, 15 pages
Research Article

A Partial Backlogging Inventory Model for Deteriorating Items with Fluctuating Selling Price and Purchasing Cost

Department of Computer Science and Information Engineering, Hung Kuang University, 34 Chung-Chie Road, Shalu, Taichung 43302, Taiwan

Received 2 October 2011; Revised 12 January 2012; Accepted 14 February 2012

Academic Editor: I. L. Averbakh

Copyright © 2012 Hui-Ling Yang. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.


In today’s competitive markets, selling price and purchasing cost are usually fluctuating with economic conditions. Both selling price and purchasing cost are vital to the profitability of a firm. Therefore, in this paper, I extend the inventory model introduced by Teng and Yang (2004) to allow for not only the selling price but also the purchasing cost to change from one replenishment cycle to another during a finite time horizon. The objective is to find the optimal replenishment schedule and pricing policy to obtain the profit as maximum as possible. The conditions that lead to a maximizing solution guarantee that the existence, uniqueness, and global optimality are proposed. An efficient solution procedure and some theoretical results are presented. Finally, numerical examples for illustration and sensitivity analysis for managerial decision making are also performed.