A Fuzzy Two-Warehouse Inventory Model of Deteriorating Items with Exponentially Demand and Backlogged Condition

Abstract

AbstractThe objective of this study is to develop an inventory policy for deteriorating items under a two-warehouse system in fuzzy environment under selling price-dependent demand with shortages which are partially backlogged. It is assumed that the retailer has two warehouses of which one is treated as owned warehouse (OW) of finite capacity and the other treated as rented warehouse (RW) with large capacity to keep the surplus products for uncertain demand with a reasonable distance from marketplace. It is also assumed that the holding cost for RW is inversely proportional to the distance of RW from market. As the retailer normally wants to sell the inventory in RW first, the inventory in RW decreases due to demand and deteriorates until it reaches zero level, while the inventory in OW is depleted due to deterioration only. In this model, it is assumed that shortages are allowed and backlogged exponentially. The demand is also assumed to be an exponential function. The model is formulated to optimize the total average cost using Graded Mean Integration Method (GMIR). Two numerical examples are given for testing the feasibility of the model and sensitivity analysis has been carried out to identify the model parameters.