Abstract
In this paper, impact of cost of substitution and joint replenishment on inventory decisions for joint substitutable and complementary items under asymmetrical substitution has been studied. The phenomenon of substitution is considered in a stock-out situation and when items become out of stock due to demand then unfulfilled demand is asymmetrically substituted by another item. We formulate the inventory model mathematically and derived optimal ordering quantities, optimal total costs and extreme value of substitution rate for all possible cases. Moreover, pseudo-convexity of the total inventory cost function is obtained and the solution procedure is provided. Numerical example and sensitivity analysis have been presented to validate the effectiveness of the inventory model and substantial improvement in total optimal inventory cost with substitution with respect to optimal total inventory cost without substitution is seen.
Highlights
As can be observed that most of the people starts his day with the use of complementary items such as toothbrush and toothpaste, tea and sugar etc
We study the impact of cost of substitution and joint replenishment on inventory decisions for two-way substitutable items with asymmetrical stock-out substitution where both items are composed with two complementary components
The literature related to the key parameter of this inventory model i.e. inventory decisions, substitutable items, complementary items, partial substitution, joint replenishment and cost of substitution can be describe as follows: The fundamental inventory model was studied by Harris (1915) and this inventory model was extended by Wilson (1934) to obtain a formula for the economic order quantity (EOQ)
Summary
As can be observed that most of the people starts his day with the use of complementary items such as toothbrush and toothpaste, tea and sugar etc. Impact of cost of substitution and joint replenishment on inventory decisions for joint substitutable and complementary items under asymmetrical substitution Rajesh Kumar Mishra, Vinod Kumar Mishra busy life because time is a more sensitive factor for everyone and most of them wants to minimize their purchasing time. We study the impact of cost of substitution and joint replenishment on inventory decisions for two-way substitutable items with asymmetrical stock-out substitution where both items are composed with two complementary components. The aim of this model is to determine optimal order quantities, the optimal total cost and the extreme value of substitution rate.
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