An EOQ model with deteriorating items and self-selection constraints

Abstract

In this paper, we consider a store that sells two vertically differentiated items that might substitute each other. These items do not only differ in quality and price, but they also target two different customer segments. Items deteriorate over time and might require price adjustments to avoidcannibalization. We provide closed-form solutions for pricing and ordering of these items that lead to key managerial insights.