Retailer’s optimal pricing and replenishment policy for new product and optimal take-back quantity of used product
In a world of limited resources, recovery of used products for reselling or recycling is critical from the economic and environmental point of view. In this paper, we have assumed that the retailer sells the new product to the customers as well as collects and sells the used products. We adopt a price dependent quadratic demand function, also the return of used product is a price and time-dependent linear function. The proposed problem is formulated as a profit maximization problem for the retailer. The objective is to find the optimal selling price, the optimal ordering quantity for the new product, and the optimal quantity of used product simultaneously such that the retailer’s total profit is maximized. At the end, the model is validated by a numerical example and sensitivity analysis is performed for the key parameters.
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