Title: An integrated production-inventory-marketing model under inflationary conditions for deteriorating items

Authors: Chandra K. Jaggi, Aditi Khanna

Addresses: Department of Operational Research, Faculty of Mathematical Sciences, University of Delhi, Delhi-10007, India. ' Department of Operational Research, Faculty of Mathematical Sciences, University of Delhi, Delhi-10007, India

Abstract: The integration of production and marketing policies is one of the key factors of successful business operation. Moreover, inventory policies for deteriorating items are very sensitive to different marketing strategies and rising inflation rate directly affects the financial situation of industries. Realising the importance of such scenario, an integrated production-inventory-marketing model has been developed under inflationary conditions for deteriorating items; where demand is considered as a function of insertions in a media, as it is well-established fact that |marginal effect of advertisement on sales is proportional to the unrealised potential of the market|. The model jointly optimises the production lot size and the number of insertions by maximising the net profit. A simple to use solution procedure has been developed to determine these parameters. Further, the model has been extended for multiple media case and a general form of demand function has been developed. The model is then formulated as a mathematical programming problem. The results have been validated with numerical examples followed by sensitivity analysis.

Keywords: inventory policy; production policy; media insertion; integration; deterioration; inflation rate; marketing policy; modelling; lot size optimisation; lot sizing.

DOI: 10.1504/IJADS.2008.022979

International Journal of Applied Decision Sciences, 2008 Vol.1 No.4, pp.435 - 454

Published online: 05 Feb 2009 *

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