Optimal ordering policy for deteriorating items with power-form stock dependent demand under two-warehouse storage facil
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timal ordering policy for deteriorating items with power-form stock dependent demand under two-warehouse storage facility Chaman Singh & S. R. Singh
Accepted: 5 September 2012 / Published online: 23 September 2012 # Operational Research Society of India 2012
Abstract In realistic world, there usually exist various factors that induce the retailer to order more items than the capacity of his Own-warehouse (OW). Therefore, for the retailer, it is very practical to determine whether or not to rent other warehouse and what order policy to adopt if other warehouse is indeed needed. For the stock dependent demand pattern, retailer has his own warehouse to display the items and may hire another warehouse of the larger capacity, treated as rented warehouse (RW) to storage the excess inventory. In this paper, an inventory model with power form stock-dependent demand rate is developed. The demand rate is assumed to be a polynomial form of current inventory level in Own-warehouse. It is also assumed that retailer first fulfills the demand (depending upon the stock displayed in the OW) directly from the RW until the inventory level in the RW reaches to the zero level, after that, demand is fulfilled from OW. As a consequence, no item is transferred from RW to OW, therefore no transfer cost (neither fixed nor variable) is considered between RW and OW. It is considered that the deterioration rate per unit items in the RW and OW are different due to different preservation environments, as a consequence the holding costs per unit item in RW and OW are also different. Proposed model is illustrated with some numerical example along with some sensitivity analysis of parameters. Keywords Power form stock-dependent demand . Two warehouse
C. Singh (*) Department of Mathematics, Acharya Narendra Dev College, University of Delhi, Govindpuri, Kalkaji, New Delhi 110019, India e-mail: [email protected] S. R. Singh Department of Mathematics, D.N. (P.G.) College, Meerut, Uttar Pradesh, India e-mail: [email protected]
OPSEARCH (Apr–Jun 2013) 50(2):182–196
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1 Introduction In classical inventory, models are developed mainly for the situation of a single-warehouse without capacity constraint. But, thinking in more practical terms, in the busy markets like super market, corporation market, and municipality market etc., the storage area of items is limited. In some practical situations, when suppliers provide price discounts for bulk purchases or when the item under consideration is a seasonal product such as the output of harvest or the cost of procuring goods is higher than the other inventory related cost or demand of items is very high or there are some problems in frequent procurement, retailer may decide to purchase a large amount of items at a time than can be stored in its own warehouse (OW). Hence, an additional storages space is often required. In this case, retailer may either rent other warehouses or rebuild a new warehouse. However, from economical point of views, they usually choose to rent other warehouses known as
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