Credit financing in economic ordering policies for deteriorating items with stochastic demand and promotional efforts in two-warehouse environment

Abstract

Retailers are nowadays focusing on promotional activities in order to attract customers because of increasing competition. Promotional efforts have significant impact on the replenishment policy and the sale price of goods. In this paper, a two warehouse inventory model is developed for deteriorating items subject to promotional efforts under permissible delay in payments. Here, a price dependent stochastic demand function is considered with partially backlogged shortages. Several realistic cases, sub cases and scenarios have been taken into account and the corresponding problems have been formulated as nonlinear constrained optimisation problems. To illustrate the proposed model two numerical examples have been solved. Further, a numerical example has been extended to perform sensitivity analysis of the model and discuss specific managerial insights.