Effect of salvage value on a two-warehouse inventory model for deteriorating items with stock-dependent demand rate and partial backlogging

Abstract

In this study, an EOQ model with two level of storage is developed when units in inventory deteriorate at a constant rate and demand is stock dependent. The salvage value is allied to deteriorated units. When stock level exceeds the capability of own warehouse (OW), it is to be kept in additional rented warehouse (RW) with higher holding cost than OW. The inventory held in RW is transferred to OW in continuous release pattern till the stock in RW gets exhausted. In developing the model it is assumed that shortages are allowed and partially backlogged. An algorithm is given to find the optimal solution. The sensitivity analysis is voted for out to analyse the effect of critical parameters on optimal solution by using MATHEMATICA–5.2 for the feasibility and applicability of our model.