Two warehouse inventory policy with price dependent demand and deterioration under partial backlogging

Abstract

In today’s era of higher competition in the business, there are many conditions such as offered concession in bulk purchasing, seasonality, higher ordering cost, etc., which force a retailer to purchase more quantities than needed or exceed the storage capacity. So in this situation the retailer has to purchase an extra warehouse named as rented warehouse to stock the extra quantity. In this paper an inventory model for deteriorating products with selling price dependent rate is developed. The occurring shortages are assumed to be partially backlogged and cycle time is also variable. The purpose of the development of this model is to compute the amount and time of order which can optimize the total average cost of the system. A solution procedure and numerical example are presented to illustrate the implementation of the proposed study. Sensitivity analysis concerning with distinct system parameters is also presented to demonstrate the model.

Keywords

• Inventory
• Deterioration
• Warehouse
• Shortages
• Partial backlogging