The effect of inflationary environment into the optimization of preservation techniques to control deterioration

Abstract

The inflation phenomenon is a common factor for today's inventory system as it is increasing with time in the real world. Every industrial corporation is performing the optimization of their current inventory techniques to achieve the highest profit at minimum cost. In this scenario, the major problem, they are facing, is the problem of deterioration which contributes to the increment of the total cost. To reduce this loss of deteriorating items; organizations are investing in preservation technology. In this present paper, an economic order quantity model is considered, in which it is assumed that the demand rate is depending on stock and selling price factors under the effect of inflation over time. The variable holding cost is assumed as a linear function of time. The main intention of this initiated paper is to find the optimal investment in preservation technology in the context of inflation so that total cost will be minimized. The case of without preservation technology and many more cases are also discussed. A numerical example with these special cases has been also discussed. Finally, the sensitivity analysis is also studied to provide several observations.