Optimal replenishment policies for non-instantaneous deteriorating items with price and stock sensitive demand under permissible delay in payment

This study is motivated by the paper of Chang et al. [International Journal of Production Economics 123 (2010) 62–68]. We extend their inventory model from two aspects. (1) The demand rate as multivariate function of price and level of inventory (2) Delay in payment is permissible. Under these assum...

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Bibliographic Details
Published in:International journal of production economics 2013-11, Vol.146 (1), p.259-268
Main Author: Soni, Hardik N
Format: Article
Language:English
Subjects:
Delay
Delay in payments
Demand (economics)
Economics
Inventories
Inventory
Inventory management
Mathematical models
Mathematical problems
Non-instantaneous deterioration
Numerical analysis
Operations research
Optimization
Sensitivity analysis
Stock-dependent demand
Stockpiling
Studies
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Summary:This study is motivated by the paper of Chang et al. [International Journal of Production Economics 123 (2010) 62–68]. We extend their inventory model from two aspects. (1) The demand rate as multivariate function of price and level of inventory (2) Delay in payment is permissible. Under these assumptions, we first formulated a mathematical model and then some useful theoretical results have been derived to characterize the optimal solutions for non-zero and zero ending inventory system. Numerical examples are presented to illustrate the theoretical results. The sensitivity analysis of a suitable example is performed and some managerial insights are proposed. Our analysis revels that it is more beneficial to keep higher inventory level, hoping to stimulate more demand, even if it results in non-zero ending inventory.
ISSN:0925-5273
1873-7579
DOI:10.1016/j.ijpe.2013.07.006