Inventory policies for non-instantaneous deteriorating items with preservation technology investment under price-sensitive time-dependent demand

Nita H. Shah, Pratik H. Shah, Milan B. Patel and Wakhid Ahmad Jauhari

International Journal of Procurement Management, 2021, vol. 14, issue 6, 702-723

Abstract: In this paper, we formulate a mathematical inventory model for non-instantaneous deteriorating items under price-sensitive and quadratic time-dependent demand. Products in the inventory system are considered to be deteriorated at a constant rate after a certain time of periods. Preservation technology investments are taken into account to reduce the deterioration rate. The objective of the model is to find the optimal cycle time, selling price, preservation cost and ordering quantity in order to maximise the total profit of retailer. An iterative procedure is proposed to solve the mathematical problems and its application is validated with a numerical example. The results from sensitivity analysis show that by investing money in preservation technology, the retailer can set a cheaper selling price and increase the total profit. It is also observed that the changes in holding cost and cost price significantly affect the optimal values of selling price and cycle time.

Keywords: inventory model; deterioration; price-sensitive time-dependent demand; preservation technology. (search for similar items in EconPapers)
Date: 2021
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