Learning effect on an inventory model with two-level storage and partial backlogging under inflation

Abstract

In this paper, we study the effect of learning on the optimal replenishment inventory policy for non-instantaneous deteriorating items with two-level storage. Here, we assumed that the ordering cost is partly constant and partly decreasing in each cycle due to learning effect. Here, shortages are allowed and partially backlogged. In addition, the effects of inflation and time value of money on replenishment policy under instantaneous replenishment are also considered. An algorithm is presented to derive optimal replenishment policy when the present value of total cost is minimised. Numerical examples are presented to demonstrate the developed model and to illustrate the procedure. In addition, the sensitivity analysis of the optimal solution with respect to various parameters of the system is carried out by using MATHEMATICA–5.2 for the feasibility and applicability of our model.