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January  2007, 3(1): 139-154. doi: 10.3934/jimo.2007.3.139

A nonlinear optimization model for optimal order quantities with stochastic demand rate and price change

M. M. Ali 1, and  L. Masinga 1,

1. 

School of Computational and Applied Mathematics, University of the Witwatersrand, 1 Jan Smut Avenue, Private Bag-3, Wits-2050, South Africa, South Africa

Received  December 2005 Revised  October 2006 Published  January 2007

An inventory problem in which the stochastic demand rate in each period is considered. A model is presented to compute optimal order quantities and optimal delivery points in the planning period. This model can also account for any anticipated price change that may occur from time to time. In addition the model can be used to compute volume discounts in accordance to the size of the order. A stochastic global optimization algorithm is used to obtain the numerical results.
Keywords: Variable Demand, Optimal Order Quantity, Non-linear Programming Model, Global Optimization., Volume Discount.
Mathematics Subject Classification: Primary: 90B05; Secondary: 65K0.
Citation: M. M. Ali, L. Masinga. A nonlinear optimization model for optimal order quantities with stochastic demand rate and price change. Journal of Industrial & Management Optimization, 2007, 3 (1) : 139-154. doi: 10.3934/jimo.2007.3.139
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