A two-warehouse inventory model for deteriorating items with linear demand under conditionally permissible delay in payment

Abstract

An inventory model for deteriorating items having two separate warehouses, one being the firm’s own warehouse (OW) of finite dimension and the other being a rented warehouse (RW) for storing units in excess of the fixed capacity of the OW in practice. The RW is assumed to offer better preserving facilities than the OW, resulting in a lower rate of deterioration, and it is assumed that higher holding costs will be charged for the RW than for the OW. In this study, a two-warehouse inventory model for deteriorating items is considered with a linear demand rate under conditionally permissible delay in payment. The purpose of this study is to find the optimal replenishment policies for minimizing the total relevant inventory costs. The results are illustrated with the help of a numerical example. A sensitivity analysis of the optimal solutions to changes in the values of the major parameters associated with the model is discussed.