Retailer's ordering policy for deteriorating items in a supply chain with varying deterioration rates

Abstract

In case of multi-item, the retailer can order the items to the supplier either independently or jointly. In both the situation the cycle inventory for all the items increases because the demand for each item may not be the equal. The goal in multi item inventory system is to decrease total costs by coordinating orders across supply chain. While considering the deteriorating items, the deterioration rate for all the items may differ causing different demand pattern for each item. The present study emphasises on the ordering policies for deteriorating items with varying deterioration rates. A generalised tailored aggregation has been provided, which gives the criteria to select the items according to their order frequency as well as deterioration rate, for placing the order jointly. The model gets reduced to Chopra and Meindl (2007) when the items are non-deteriorating (θ = 0). Further, it is shown numerically that the proposed algorithm gives the minimum total cost for the retailer as compared to the independent and joint ordering policy. A case study has been illustrated to present a real life scenario.