Analyzing how inflation affects non-instantly decaying goods with demand linked to ads and selling price in a dual-warehouse setup

Abstract

This study explores inventory management strategies specifically designed for non-instantaneous deteriorating goods under inflationary conditions, utilizing a dual-warehouse system—one owned and the other rented with limited storage capacity. We examine the effects of advertising frequency and product selling price on demand rates, taking into account the gradual decline in customer patience, which leads to partial backlogging of shortages. The primary objective is to determine optimal replenishment policies for retailers that effectively minimize total costs per unit time. In real life, managing oil inventory is crucial for industries where factors like gradual deterioration, demand fluctuations due to advertising and pricing, and sensitivity to inflation require sophisticated inventory models to optimize replenishment policies and minimize costs. To validate our proposed inventory model, we provide a numerical. A sensitivity study using MATLAB R2024a software highlights the impact of parameter changes, providing significant information for decision-makers across various industries.

Keywords

• Non- instantaneous deterioration
• Advertisement and selling price dependent demand
• Two-warehouse
• Time-dependent holding cost
• Backlogging
• Inflation