This paper presents a modified model for a deteriorating inventory system determining price and production levels. Specifically, the exponential distribution is used to represent the distribution of the time to deterioration. The optimal production quantity is derived under conditions of continuous review, deterministic demand and no shortage. The maximum-profit price decisions are computed with changes in product deterioration. Finally, this paper shows a numerical example which elucidates the impact of deterioration and price
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Kang et al. (1983) studied this question.
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