Preservation technology investment for an inventory system with variable deterioration rate under expiration dates and price sensitive demand

Abstract

The proposed study addresses a supplier-retailer inventory problem by considering the detrimental impacts of deterioration. The inventory produced by the supplier undergo a machine-shift and hence, produces non-conforming items. The retailer uses the preservation technology to deal with deteriorating items ingeniously where the demand is price-sensitive at the buyers end. Two models are developed through different means viz. Integrated and Bi-level approach and compared so to impart some constructive organizational insights. Sensitivity analysis was done over a numerical example to validate strength of the developed models.

Keywords

• variable deterioration
• machine-shift
• price-sensitive demand
• expiration date
• bi-level approach
• preservation technology