Effect of inflation on a two-warehouse inventory model for deteriorating items with time varying demand and shortages

Abstract

In the present study we proposed an inventory model for deteriorating items under the two ware-house storage systems. In the present market scenario, inflation is an important key factor to be considered during modelling of an inventory system. Effect of inflation on the inventory system cannot be ignored because of uncertainty of demand and supply. The cost of inventory fluctuated in the present market scenario due to inflation and therefore inflation has been taken into account with the combination of exponential demand and model has been formulated without the shortages considering that the supply is fully made available instantly when demanded. The objective of this study is to derive the retailer's optimal replenishment policy that minimise the total present worth inventory cost. Finally, numerical example is provided to illustrate the proposed model. Sensitivity analysis is carried out and some managerial implications are presented.