ISSN 2167-0439
International Journal of Management and Business Studies ISSN 2167-0439 Vol. 7 (5), pp. 001-009, May, 2017. © International Scholars Journals
Full Length Research Paper
Optimal marketing and production planning with reliability consideration
Seyed Jafar Sadjadi, Mir-Bahador Aryanezhad and Armin Jabbarzadeh*
Industrial Engineering Department, Iran University of Science and Technology, Tehran, Iran.
Accepted 21 February, 2017
Abstract
One of the primary assumptions on many optimal pricing strategies is that there is no imperfect product. This simple assumption often makes them impractical to use, since it is almost impossible to manage a production with virtually no defect. In this paper, the study proposes a new method where the reliability of the production is incorporated into pricing, marketing and production planning. The integrated model of this paper simultaneously determines price of products, marketing expenditure, lot size, setup cost, inventory holding cost and reliability of the production process. This model is formulated as a nonlinear optimization problem and the optimal solution in closed form is derived using geometric programming. In order to examine the behaviour of the proposed method, the study tests the modeling formulation using a numerical example.
Key words: Optimal pricing, marketing planning, production management, geometric programming.