Smart Purchasing and Optimal Retailing Inventory Decisions under Uncertainty and Learning

Lowering selling price and maintaining showroom may attract customer’s attention. However, the impact selling price and stock on demand may not be linearly transferred to the profitability issue. In such case smart purchasing and optimal inventory management decision is crucial. In this paper, we design an EOQ model addressing smart purchasing and pricing decision for an inventory management scenario using a special learning mechanism under uncertainty. The demand is considered as a function of selling price and stock incorporating the marginal pricing and purchasing concepts. Also, the natural deterioration is included in the hypothesis of model formulation. The concavity of the average profit function with respect to inventory management cycle and monotonic decreasing nature of the same function with learning frequency are established mathematically in this paper. Also, numerical simulation, and the managerial implication on snacks retail business are provided.