Joint Pricing and Lot Sizing Policy under Order-Size-Dependent Delay in Payments

This paper deals with the problem of determining the retailer's optimal price and order size under the condition of order-size-dependent delay in payments. It is assumed that the length of delay is a function of the retailer's total amount of purchase. The constant price elasticity demand function is adopted which is a decreasing function of retail price. Investigation of the properties of an optimal solution allows us to develop an algorithm whose validity is illustrated through an example problem.