Decaying inventory model with different rates and varying costs under preservation technology investment

Abhinav Goel and Anshika Singh

International Journal of Mathematics in Operational Research, 2024, vol. 28, issue 2, 230-252

Abstract: Decay, damage, or spoilage of any item is referred to as deterioration. Maintaining the product in excellent shape is a big problem for many retailers because the product loses value with increasing deterioration. Many papers have considered constant deterioration but in real life, the deterioration rate varies depending on the type of stock. This paper assumes that the item stored in the warehouse initially depletes due to demand and then, it decays at a constant and exponential rate, which is evident in the food and textile industries. With the utilisation of preservation technologies, the pace of degradation can be reduced. A mathematical framework with eventually decaying products is formed where demand depends on products and has variable carrying costs as the inventory's expense rises over time. A sample as a numerical analysis is presented to verify the outcome of the suggested model. An optimal solution for the cost function is calculated. Evaluation of sensitivity is done to determine how a modification of parameter affects the optimum solution, including and excluding preservation technology investment. Furthermore, the study's findings are used to generate several insightful managerial observations.

Keywords: inventory; constant deterioration; exponential deterioration; stock-dependent demand; variable carrying cost; preservation technology; optimisation; non-instantaneous deterioration; EOQ. (search for similar items in EconPapers)
Date: 2024
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