Effect of Inflation and Permitted Three-Slot Payment on Two-Warehouse Inventory System with Stock-Dependent Demand and Partial Backlogging

Rajamanickam Thilagavathi, Jagadeesan Viswanath, Lenka Cepova () and Vladimira Schindlerova
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Rajamanickam Thilagavathi: Department of Mathematics, Vel Tech Rangarajan Dr. Sagunthala R&D Institute of Science and Technology, Chennai 600062, India
Jagadeesan Viswanath: Department of Mathematics, Vel Tech Rangarajan Dr. Sagunthala R&D Institute of Science and Technology, Chennai 600062, India
Lenka Cepova: Department of Machining, Assembly and Engineering Metrology, Faculty of Mechanical Engineering, VSB-Technical University of Ostrava, 708 00 Ostrava, Czech Republic
Vladimira Schindlerova: Department of Mechanical Engineering Technology, Faculty of Mechanical Engineering, VSB-Technical University of Ostrava, 708 00 Ostrava, Czech Republic

Mathematics, 2022, vol. 10, issue 21, 1-13

Abstract: This study examines the effect of monetary inflation for a two-warehouse single-product inventory system, in which items are stored in a limited capacity Own Warehouse ( OW ) and an unlimited capacity Rental Warehouse ( RW ). Demand for an item is considered stock dependent. Items may deteriorate at a different constant rate in both warehouses. Shortages are allowed in the stock-out period and are partially backlogged and satisfied in the next replenishment point. The supplier permits flexible payment options for the retailer to pay the amount in three equal payments at different time points. The retailers’ preferred payment option is as follows: the first payment is prior to the replenishment point with some discount; the second payment is one-third of the total purchasing cost, which is paid at the time of the replenishment epoch; and the third payment is after the replenishment point and before the start of the next cycle, with some penalty. The influence of inflation on the cost calculation is considered, and an analytic expression for optimal minimal cost is explicitly derived from this. We performed arrived sensitivity analysis to discern the effects of the inflation and backlogging rates, as well as the effects of the discount rate on purchasing cost, and the effects of penalties upon the late payment of purchasing costs in optimizing the total cost.

Keywords: two-warehouse inventory; stock-dependent demand; inflation; payment options; partial backlogging (search for similar items in EconPapers)
JEL-codes: C (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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