Two warehouse inventory model for deteriorating items with stock dependent demand under permissible delay in payment

Abstract

In this paper, a two warehouse inventory model for deteriorating items is studied with stock dependent demand rate. Holding cost of rented warehouse has higher than the owned warehouse due to better preservation facilities in rented warehouse. Due to the improved services offer in rented warehouse, the deterioration rate in rented warehouse is less than deterioration rate in owned warehouse. To reduce inventory cost, items of rented warehouse are consumed first and then the items of owned warehouse are consumed because it will be profitable for the organization. Permissible delay in payments allowed to the inventory manager is also taken into account. The study includes some features that are likely to be associated with certain types of inventory, like inventory of seasonal fruits and vegetables, newly launched fashion items, etc. The optimum replenishment policies are determined by minimizing the total cost in a replenishment interval. Sensitivity analysis has also been performed by changing (increasing or decreasing) one parameter at a time keeping the remaining parameters unchanged.