Optimisation of fuzzy EOQ model for advertising and price sensitive demand model under dynamic ceiling on potential adoption

Abstract

Marketing strategies such as advertising and pricing can play an important role in the acceptance of technology products by consumers. This phenomenon indicates that diffusion of technology products in the society may have strong linkages with unit selling price and advertisement effort. Therefore, management should sincerely reflect on pricing and advertising strategy during formulation of the inventory policies. This paper aims to develop an economic order quantity model for finding strategy for a firm that sells technology products' over a finite planning horizon. Demand is considered to follow a lifecycle phenomenon with dynamic ceiling on the potential adoptions and sensitive to advertising expenditure and unit selling price. The fuzzy criterion has also been incorporated to address the problems of uncertain nature of marketing parameters. The model is illustrated with a numerical example and a comprehensive sensitivity analysis of the optimal solution with respect to different parameters has also been performed.