Article: Ordering policy for deteriorating items in a two-warehouse environment with partial backlogging Journal: International Journal of Logistics Systems and Management (IJLSM) 2013 Vol.16 No.1 pp.16 - 40 Abstract: In the present study, we consider the two-warehouse inventory problem for deteriorating items with constant demand rate. Shortages are allowed and partially backlogged. A rented warehouse (RW) is used to store the excess units over the fixed capacity of the own warehouse (OW). According to first-in-first-out (FIFO) policy, the items that are stored first are used first. FIFO policy yields fresh and good conditioned stock thereby resulting in customer satisfaction, especially when items are deteriorating in nature. However, usually the two warehousing systems assume that the holding cost of items is more in RW than the OW due to modern preserving facilities. Thus, to reduce the inventory costs, it is imperative to consume the goods of RW at the earliest time. This approach is termed as last-in-first-out (LIFO) approach. The objective of the present research is to extend a two-warehouse inventory model with FIFO and LIFO dispatching policies with partial backlogging rate. Further, comparative study of two models has also been performed with the help of a numerical example. Sensitivity analysis has also been carried out. Inderscience Publishers - linking academia, business and industry through research

Title: Ordering policy for deteriorating items in a two-warehouse environment with partial backlogging

Authors: Chandra K. Jaggi; Sarla Pareek; Priyanka Verma; Ritu Sharma

Addresses: Department of Operational Research, Faculty of Mathematical Sciences, University of Delhi, Delhi 110007, India ' Centre for Mathematical Sciences, Banasthali University, Banasthali – 304022, Rajasthan, India ' Department of Computer Applications, Gitarattan International Business School, Madhuban Chowk, Rohini, New Delhi-110085, India ' Centre for Mathematical Sciences, Banasthali University, Banasthali – 304022, Rajasthan, India

Abstract: In the present study, we consider the two-warehouse inventory problem for deteriorating items with constant demand rate. Shortages are allowed and partially backlogged. A rented warehouse (RW) is used to store the excess units over the fixed capacity of the own warehouse (OW). According to first-in-first-out (FIFO) policy, the items that are stored first are used first. FIFO policy yields fresh and good conditioned stock thereby resulting in customer satisfaction, especially when items are deteriorating in nature. However, usually the two warehousing systems assume that the holding cost of items is more in RW than the OW due to modern preserving facilities. Thus, to reduce the inventory costs, it is imperative to consume the goods of RW at the earliest time. This approach is termed as last-in-first-out (LIFO) approach. The objective of the present research is to extend a two-warehouse inventory model with FIFO and LIFO dispatching policies with partial backlogging rate. Further, comparative study of two models has also been performed with the help of a numerical example. Sensitivity analysis has also been carried out.

Keywords: two-warehouse inventory modelling; deterioration; partial backlogging; lost sales; first-in-first-out; FIFO; last-in-first-out; LIFO; ordering policy; deteriorating items.

DOI: 10.1504/IJLSM.2013.055560

International Journal of Logistics Systems and Management, 2013 Vol.16 No.1, pp.16 - 40

Published online: 26 Dec 2013 *

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Title: Ordering policy for deteriorating items in a two-warehouse environment with partial backlogging

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