Two-warehouse inventory model for deteriorating items with linear trend in demand and shortages under inflationary conditions Online publication date: Wed, 02-Dec-2009
by Chandra K. Jaggi, Priyanka Verma
International Journal of Procurement Management (IJPM), Vol. 3, No. 1, 2010
Abstract: Inflation plays a very interesting and significant role: it increases the cost of goods. To safeguard from the rising prices, during the inflation regime, the organisation prefers to keep a higher inventory, thereby increasing the aggregate demand. This additional inventory needs additional storage space that is facilitated by a rented warehouse. Ignoring the effects of time value of money and inflation might yield misleading results. In the present study, a 'two-warehouse inventory model with linear trend in demand under the inflationary conditions' has been developed. A rented warehouse (RW) is used to store the excess units over the capacity of the own warehouse (OW). The stock is being transferred from rented warehouse to own warehouse in a continuous release pattern with per unit transportation cost being factored in. The solution methodology provided in the model helps to decide on the feasibility of renting a warehouse. The results have been elucidated with numerical examples.
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