Determination of optimum price policies with quantity discount for deteriorating items

In this study, one kind of deteriorated item which supplied from a supplier is investigated. A mathematical model was developed for maximizing profit under quantity discounts with consideration of unit purchasing costs and unit holding costs. In the constructed model inventory shortage is allowed and each unsatisfied demand has generate negative effect on total cost. As a result of model, optimum order quantity and order period were obtained. Also, the number of discounts will make during the shelf life was entered and depend on this number, the sales prices for each discount period were obtained from the constructed integer non linear mathematical model. The obtained optimal solution of mathematical model was tested by a constructed simulation model. Developed approach was applied to a real world data of a deteriorated item obtained from a large vendor.