An integrated production-inventory-marketing model under inflationary conditions for deteriorating items

Abstract

The integration of production and marketing policies is one of the key factors of successful business operation. Moreover, inventory policies for deteriorating items are very sensitive to different marketing strategies and rising inflation rate directly affects the financial situation of industries. Realising the importance of such scenario, an integrated production-inventory-marketing model has been developed under inflationary conditions for deteriorating items; where demand is considered as a function of insertions in a media, as it is well-established fact that 'marginal effect of advertisement on sales is proportional to the unrealised potential of the market'. The model jointly optimises the production lot size and the number of insertions by maximising the net profit. A simple to use solution procedure has been developed to determine these parameters. Further, the model has been extended for multiple media case and a general form of demand function has been developed. The model is then formulated as a mathematical programming problem. The results have been validated with numerical examples followed by sensitivity analysis.