Stochastic inventory model with income and price dependent demand

R.H. Waliv and H.P. Umap

International Journal of Procurement Management, 2019, vol. 12, issue 5, 606-620

Abstract: A multi-item cost minimising stochastic inventory model is developed in stochastic environment. Demand is considered to be function of income level of consumer and price of commodity. Budget, income and price are assumed to be random and their randomness is expressed by normal distribution. Deterioration rate is modelled using Weibull distribution. Stochastic inventory model is converted into equivalent crisp inventory model by using stochastic nonlinear programming (SNLP) technique. Crisp problem is solved by fuzzy nonlinear programming (FNLP) technique and intuitionistic fuzzy optimisation (IFO) technique. Sensitivity analysis of the optimum solution with respect to feasible changes in average and variance of income level and price is discussed and conclusions are noted.

Keywords: Weibull distribution deterioration; price and income dependent demand; stochastic nonlinear programming; SNLP; fuzzy nonlinear programming technique; intuitionistic fuzzy optimisation technique. (search for similar items in EconPapers)
Date: 2019
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