A two-warehouse multi-item supply chain with stock dependent promotional demand under joint replenishment policy: a mixed-mode ABC approach

Abstract

A multi-item two-level supply chain model under promotional cost sharing is proposed and analysed in this investigation. Here, it is assumed that a retailer purchases different items from a wholesaler under joint replenishment policy and sells the items to its customers. Due to the scarcity of the market place, the retailer uses two rented warehouses to run the business – one with moderate capacity situated at the heart of the market place, namely and another with sufficiently large capacity, a little away from the market place, namely . Items are ordered jointly using basic period (BP) policy, initially stored at and transferred jointly to for sale following another BP policy. Demands of the items depend on displayed inventory levels, selling prices as well as the frequencies of the advertisements. Total cost due to the reduced selling prices and the advertisements is considered as the promotional cost. The problem is formulated as a mixed-integer optimisation problem in crisp as well in imprecise environments. To solve such real-life problems, here artificial bee colony algorithm is modified, tested and used. Model is illustrated with some hypothetical test problems and some managerial insights are outlined.