Preservation of deteriorating seasonal products with stock-dependent consumption rate and shortages

Abstract

In literature, many inventory studies have been developed by assuming deterioration of items as either a variable or constant. But in real life situation, deterioration of goods can be reduced by adding some extra effective capital investment in preservation technology. In this paper, a deteriorating inventory model with ramp-type demand under stock-dependent consumption rate by assuming preservation technology cost as a decision variable is formulated. Shortages are allowed and the unsatisfied demand is partially backlogged at a negative exponential rate with the waiting time. The objective of this study is to obtain the optimal replenishment and preservation technology investment strategies so that the total profit per unit time is maximum. Further, the necessary and sufficient conditions are considered to prove the existence and uniqueness of the optimal solution. Some numerical examples along with graphical representations are provided to illustrate the proposed model. Sensitivity analysis of the optimal solution with respect to major parameters of the system has been carried out and the implications are discussed.