Title: A two warehouse inventory model for deteriorating items with variable demand under alternative trade credit policy

Authors: Ali Akbar Shaikh

Addresses: School of Engineering and Sciences, Tecnológico de Monterrey, E. Garza Sada 2501 Sur, C.P. 64849, Monterrey, Nuevo León, México

Abstract: In this paper, we have developed an inventory model for single deteriorating items with two separate storage facilities (own and rented warehouses) due to limited capacity of the existing storage, i.e., own warehouse considering allowable delay in payment. The demand rate of this item is dependent on continuous time, selling price of the item and the frequency of advertisement. Partially, backlogged shortages are allowed with a rate dependent on the duration of waiting time up to the arrival of next lot. To formulate the model, we have considered different realistic situations. The corresponding problem has been formulated as constrained nonlinear mixed integer problem and solved by generalised reduced gradient (GRG) method. Finally, a numerical example has been considered to illustrate and validate the model. Sensitivity analyses have been carried out by changing one parameter at a time and keeping the other at their original value.

Keywords: warehouse inventory modelling; deteriorating items; variable demand; alternative credit policy; deterioration; partial backlogging; permissible delay; payment delay; advertisements; advertising frequency; trade credit; inventory management; generalised reduced gradient; GRG; constrained MINLP; mixed integer nonlinear programming.

DOI: 10.1504/IJLSM.2017.083221

International Journal of Logistics Systems and Management, 2017 Vol.27 No.1, pp.40 - 61

Received: 28 Jul 2015
Accepted: 27 Feb 2016
Published online: 22 Mar 2017 *

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