Title: Two-warehouse inventory model for deteriorating items when demand is price sensitive

Authors: Chandra K. Jaggi, K.K. Aggarwal, Priyanka Verma

Addresses: Department of Operational Research, Faculty of Mathematical Sciences, New Academic Block, University of Delhi, Delhi 110007, India. ' Department of Operational Research, Faculty of Mathematical Sciences, New Academic Block, University of Delhi, Delhi 110007, India. ' Department of Operational Research, Faculty of Mathematical Sciences, New Academic Block, University of Delhi, Delhi 110007, India

Abstract: The main objective of this article is to develop a two-warehouse inventory model for deteriorating items when demand is price sensitive. It is assumed that the units are transported under a bulk release pattern from Rented Warehouse to Own Warehouse and the deterioration rates of the items are different in the two warehouses. Further, the model jointly optimises the order quantity and selling price. Depending upon the optimal order quantity, decision is made whether to rent other warehouse. The optimal shipment policy is also provided if indeed the other warehouse is needed. The results have been validated with the help of a numerical example. Sensitivity analysis on the demand parameters is also performed.

Keywords: deterioration; inventory modelling; price-dependent demand; two-warehouse systems; price sensitive demand; deteriorating items; optimal shipment policy; optimal order quantity.

DOI: 10.1504/IJOR.2010.032425

International Journal of Operational Research, 2010 Vol.7 No.4, pp.530 - 551

Available online: 02 Apr 2010 *

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