A demand and supply chain inventory management with probabilistic and time dependent price

Abstract

In the real world, it has been a challenging part for the vendors and stockholders selling the perishable product. Especially, when price of the product reduces with time, due to high rate of deterioration and eventually vanishes. The products like vegetable scrap, food products, wood stock, etc. comes under this category. In this paper, we develop a demand and supply chain inventory model with deterioration and exponential demand to maximise the profit of a stockholder selling a perishable product. The selling price is probabilistic and a decreasing function of time so that, after a finite time limit the product has no market value. We consider three probability distributions uniform, triangular and gamma, and compare the total profit under three distributions and represent the result graphically. We perform sensitivity analysis and interpret the result both theoretically and graphically. Further, we study the model under different situation and provide managerial implications.