Title: Effects of probable inflation on a two-warehouse partial backlogging inventory model with permissible delay in payment for deteriorating and imperfect items

Authors: Milad Abdoli; Abolfazl Mirzazadeh; Mohammad Mohammadi

Addresses: Department of Industrial Engineering, Faculty of Engineering, Kharazmi University, Mofateh Avenue, Postal Code: 15719-14911, Tehran, Iran ' Department of Industrial Engineering, Faculty of Engineering, Kharazmi University, Mofateh Avenue, Postal Code: 15719-14911, Tehran, Iran ' Department of Industrial Engineering, Faculty of Engineering, Kharazmi University, Mofateh Avenue, Postal Code: 15719-14911, Tehran, Iran

Abstract: In the real world, inflation is constantly changing due to economic, political, social and cultural issues. For example, economic factors such as cost of raw materials, changes in the world inflation rate, demand level, labour cost, exchange rates, productivity level, tax, etc. are effective in this purpose. Thus, we consider inflation like as probable form that follows uniform distribution. Also, in this paper, we assume that some purchased items might not be perfect and are kept in stock and sold at a price lower than perfect quality. These two factors have high effect on corporate profits. Based on the above phenomenon, we incorporate probable inflation and imperfect items into model of Yang and Chang (2013) and develop a two-warehouse partial backlogging inventory model for deteriorating and imperfect items with permissible delay in payment under probable inflation. Finally, numerical examples are used to illustrate the theoretical results, which are further clarified through a sensitivity analysis on the model parameters and some managerial implications are provided.

Keywords: inventory management; probable inflation; deterioration; shortages; imperfect items; uniform distribution; optimisation; payment delay; two-warehouse; partial backlogging; inventory modelling; permissible delays; deteriorating items.

DOI: 10.1504/IJOR.2016.078452

International Journal of Operational Research, 2016 Vol.27 No.1/2, pp.4 - 22

Available online: 02 Aug 2016 *

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