Two-warehouse partial backlogging inventory models for deteriorating items under inflation

Abstract

In many real-life situations, the practical experiences reveal that some but not all customers will wait for backlogged items during a shortage period, such as for fashionable commodities or high-tech products with short product life cycle. The longer the waiting time is, the smaller the backlogging rate would be. According to such phenomenon, taking the backlogging rate into account is necessary. Thus, I here extend the models introduced in Yang [2004. Two-warehouse inventory models for deteriorating items with shortages under inflation. European Journal of Operational Research 157(2), 344–356] to incorporate partial backlogging and then compare the two two-warehouse inventory models based on the minimum cost approach. The study shows that the optimal solution not only exists but also is unique and Model 2 is still less expensive to operate than Model 1 if the factors of partial backlogging and inflationary effect are considered. Finally, some numerical examples for illustration are provided and sensitivity analysis on some parameters is made.