Pricing and inventory policies for Hi-tech products under replacement warranty

Yu Chung Tsao, Wei Guang Teng, Ruey Shii Chen, Wang Ying Chou

Research output: Contribution to journalArticlepeer-review

18 Citations (Scopus)


Companies, especially in the Hi-tech (high-technology) industry (such as computer, communication and consumer electronic products), often provide a replacement warranty period for purchased items. In reality, simultaneously determining the price and inventory decisions under warranty policy is an important issue. The objective of this paper is to develop a joint pricing and inventory model for Hi-tech products under replacement warranty policy. In the first model, we consider a Hi-tech product feature in which the selling price is declining in a trend. We determine the optimal inventory level for each period and retail price for the first period while maximising the total profit. In the second model, we further determine the optimal retail price and inventory level for each period in the dynamic demand market. This study develops solution approaches to solve the problems described above. Numerical analysis discusses the influence of system parameters on the company's decisions and behaviours. The results of this study could serve as a reference for business managers or administrators.

Original languageEnglish
Pages (from-to)1255-1267
Number of pages13
JournalInternational Journal of Systems Science
Issue number6
Publication statusPublished - 2014 Jun 3

All Science Journal Classification (ASJC) codes

  • Control and Systems Engineering
  • Theoretical Computer Science
  • Computer Science Applications

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