An entropic order quantity inventory model for quality assessment considering price sensitive demand

Sudipta Sinha (), Nikunja Mohan Modak () and Shib Sankar Sana ()
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Sudipta Sinha: University of Burdwan
Nikunja Mohan Modak: Palpara Vidyamandir
Shib Sankar Sana: Kishore Bharati Bhagini Nivedita College

OPSEARCH, 2020, vol. 57, issue 1, No 5, 88-103

Abstract: Abstract In today’s technology-driven world, despite of efficient planning of manufacturing system and development of refined production technologies and control systems; the items produced in a manufacturing system may have some fraction of defectives. Thus inspection of a lot of the items is essential to differentiate perfect and imperfect products. Every business sector has some hidden costs involved in additional managerial cost which are also imperative to calculate for smooth running of the business sector. This work considers an entropic order quantity model with selling price dependent demand and screening to separate imperfect quality products. We find an important observation about effect of entropy cost on the maximization of profit which states that the entropy cost has similar behavior as the selling price of the product. Our findings enlighten the insights of the entropic order inventory model and enrich the advancement of the literature of inventory model. Finally, a hypothetical numerical example is set to validate the model and sensitivity analysis has also been performed to study the impact of various parameters on the optimal solution.

Keywords: Inventory; Entropy; Imperfect quality; Price-sensitive demand; Screening (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s12597-019-00406-y

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