A deterministic order level inventory model for deteriorating items with two storage facilities

Abstract

Sarma [3] developed an inventory model for a single deteriorating item which is stored in two different warehouses: an owned warehouse (OW) and a rented warehouse (RW). The rented warehouse is used for storing the excess units over the fixed capacity W of the OW and is assumed to offer better preserving facilities than the OW resulting in a lower rate of deterioration. Also, the RW is assumed to charge higher holding cost than the OW. In his paper, Sarma obtained an optimal replenishment schedule when the demand rate is constant over a fixed cycle length where the OW has to stock a specified known quantity. In this paper, we relax the assumptions of fixed cycle length and known quantity to be stocked in the OW. Further, we find the optimal schedule that minimizes the total cost per unit time in a cycle for an arbitrary demand rate function where cycles are assumed to form a regenerative process. We also present numerical examples.