Two-warehouse optimized inventory model for time dependent decaying items with ramp type demand rate under inflation

Abstract

This paper deals with developing an inventory model for two warehouses. In today's business era, there are various types of conditions such as discounts, bulk storage and seasonal products forcing the buyer to purchase the order more than owned warehouse capacity. To store the excess unit of purchase order, buyer arrange additional storage space called as rented warehouse. It is known that the demand of the seasonal products (as woolen garments) increases at the beginning of the season up to a certain time and then stabilizes to a constant rate for the remaining time of the season. The ramp type demand rate forces the buyer to store a higher quantity of the product at the beginning of the season. Most of the physical goods undergo decay or deterioration over time so we study deteriorating seasonal products in this paper. This two warehouse inventory model is developed with inflation and shortages. The model starts with rent warehouse, in first rent warehouse's inventory level is depleted due to demand and deterioration. At this time own warehouse is depleted due to deterioration only. But after that the inventory level of owned warehouse is depleted due to both demand and deterioration. The shortages are considered in owned warehouse, which is partially backlogged. Numerical solution of the model is obtained to verify the optimal solution. Comprehensive sensitivity analysis has been carried out for showing the effect of variations in the parameters. The model is solved analytically by minimizing the total cost.