Title: Stochastic inventory model with income and price dependent demand

Authors: R.H. Waliv; H.P. Umap

Addresses: Department of Statistics, Kisan Veer Mahavidyalaya, Wai Maharashtra, India ' Department of Statistics, Y.C.I.S., Satara Maharashtra, India

Abstract: A multi-item cost minimising stochastic inventory model is developed in stochastic environment. Demand is considered to be function of income level of consumer and price of commodity. Budget, income and price are assumed to be random and their randomness is expressed by normal distribution. Deterioration rate is modelled using Weibull distribution. Stochastic inventory model is converted into equivalent crisp inventory model by using stochastic nonlinear programming (SNLP) technique. Crisp problem is solved by fuzzy nonlinear programming (FNLP) technique and intuitionistic fuzzy optimisation (IFO) technique. Sensitivity analysis of the optimum solution with respect to feasible changes in average and variance of income level and price is discussed and conclusions are noted.

Keywords: Weibull distribution deterioration; price and income dependent demand; stochastic nonlinear programming; SNLP; fuzzy nonlinear programming technique; intuitionistic fuzzy optimisation technique.

DOI: 10.1504/IJPM.2019.102156

International Journal of Procurement Management, 2019 Vol.12 No.5, pp.606 - 620

Received: 14 May 2018
Accepted: 15 Nov 2018

Published online: 09 Sep 2019 *

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