Pricing and Inventory Decisions of Deteriorating Complementary Products

Abstract

In this research two models for pricing and inventory decisions of complementary products with and without deterioration assumption are developed. In both of them, we assumed that the demand function of each product is dependent on own price and the price of another one. The aim of this paper is to optimize the total profit of integrated system such that the optimal values for the price of each product, order quantity and period length are determined. Using two theorems concavity of both profit functions is proved and in order to show the applicability of the proposed models two numerical examples are provided. Then sensitivity analysis on complementary degree for both models is done.