AN OPTIMAL INVENTORY POLICY FOR MONOPOLISTIC MARKET EXPERIENCING HYBRID BACKORDER AND SWITCHING COST

Abstract

In the present day, companies compete with one another to attain the peak of achievement. The products that are sold in monopolistic and captive market need to follow optimal strategies to become successful. Monopolistic competition is that many manufacturers sell goods that are differentiated from one another by branding or quality. This paper introduces inventory into the model of monopolistic competition, which undergoes hybrid backorder. It is fitting to take into consideration of transportation cost in the model since the goods should be delivered at the right time and place. A distinctive aspect of the model is that the cost of advertising and brand recognition is included since monopolistic market needs publicity. Backorder price discount is offered to avoid the lost sales. A numerical example is provided to exemplify the proposed model.