AN ADVERTISING-INCLUSIVE PRODUCTION LOT-SIZE MODEL UNDER CONTINUOUS DISCOUNT PRICING

This article deals with the interaction of a deterministic production lot size inventory model with uniform replenishment rate and different ial pricing conditions. We present a method for arriving at a producti on lot size formula, which takes into account the effect of varying ma rketing conditions on demand and the possibility of defective items in the production process. Additionally, based upon the previous studies , different model formulations are introduced to deal with the issue o f defective items. The profile maximization problem for this model is derived for two quantity discount cases. hyperbolic-decreasing and lin ear-decreasing. A numerical example along with sensitivity analysis is provided to illustrate the results derived. Furthermore, an easy-to-u se computer algorithm is developed to determine the optimal values of production lot-size and profit.