Abstract: This paper studies ordering and pricing issues of a retailer who faces a linear-sensitive demand. The definition of a reasonable retail price is put forward. After that, a deterministic model for trading off sales revenue and total cost is constructed, in which the retailer determines the optimal ordering schedule and the optimal retail price simultaneously for the sake of maximizing its total profit. It is shown that the acquired retail prices are all reasonable. During the process of derivation, both ordering time points and the optimal retail price are expressed as functions of ordering times. By solving a quadratic programming model with an undetermined parameter, we demonstrate that the optimal ordering time points of the retailer are equidistant time points on the given selling periods. Further, the sensitivity of each parameter is analyzed and some meaningful conclusions are drawn. Finally, the ordering times is obtained by analyzing the derivatives of the profit function.

Key words: Linear-sensitive demand, Ordering and pricing, Reasonable sales price, Equidistant time points