October  2013, 9(4): 855-883. doi: 10.3934/jimo.2013.9.855

Two-warehouse inventory models for deteriorating products with ramp type demand rate

1. 

Department of Mathematics, University of Ioannina, 451 10, Ioannina, Greece

2. 

Department of Business Administration, Business Excellence Laboratory, University of Macedonia, 156 Egnatia Street, 54006 Thessaloniki, Greece

Received  August 2011 Revised  February 2013 Published  August 2013

In today's business environment, there are various reasons, namely, bulk purchase discounts, seasonality of products, re-order costs, etc., which force the buyer to order more than the warehouse capacity (owned warehouse). Such reasons call for additional storage space to store the excess units purchased. This additional storage space is typically a rented warehouse. It is known that the demand of seasonal products increases at the beginning of the season up to a certain moment and then is stabilized to a constant rate for the remaining time of the season (ramp type demand rate). As a result, the buyer prefers to keep a higher inventory at the beginning of the season and so more units than can be stored in owned warehouse may be purchased. The excess quantities need additional storage space, which is facilitated by a rented warehouse.
    In this study an order level two-warehouse inventory model for deteriorating seasonal products is studied. Shortages at the owned warehouse are allowed subject to partial backlogging. This two-warehouse inventory model is studied under two different policies. The first policy starts with an instant replenishment and ends with shortages and the second policy starts with shortages and ends without shortages. For each of the models, conditions for the existence and uniqueness of the optimal solution are derived and a simple procedure is developed to obtain the overall optimal replenishment policy. The dynamics of the model and the solution procedure have been illustrated with the help of a numerical example and a comprehensive sensitivity analysis, with respect to the most important parameters of the model, is considered.
Citation: Konstantina Skouri, Ioannis Konstantaras. Two-warehouse inventory models for deteriorating products with ramp type demand rate. Journal of Industrial & Management Optimization, 2013, 9 (4) : 855-883. doi: 10.3934/jimo.2013.9.855
References:
[1]

L. Benkherouf, A deterministic order level inventory model for deteriorating items with two storage facilities,, International Journal of Production Economics, 48 (1997), 167.

[2]

A. Goswami and K. S. Chaudhuri, An economic order quantity model for items with two levels of storage for a linear trend in demand,, Journal of the Operational Research Society, 43 (1992), 157.

[3]

S. K. Goyal and B. C. Giri, Recent trends in modeling of deteriorating inventory,, European Journal of Operational Research, 134 (2001), 1. doi: 10.1016/S0377-2217(00)00248-4.

[4]

R. M. Hill, Inventory model for increasing demand followed by level demand,, Journal of the Operational Research Society, 46 (1995), 1250.

[5]

T.-P. Hsieh, C.-Y. Dye and L.-Y. Ouyang, Determining optimal lot size for a two-warehouse system with deterioration and shortages using net present value,, European Journal of Operational Research, 191 (2008), 182. doi: 10.1016/j.ejor.2007.08.020.

[6]

M. D. Intriligator, "Mathematical Optimization and Economic Theory,", Philadelphia, (2002). doi: 10.1137/1.9780898719215.

[7]

S. Kar, A. K. Bhunia and M. Maiti, Deterministic inventory model with two levels of storage, a linear trend in demand and a fixed time horizon,, Computers and Operations Research, 28 (2001), 1315. doi: 10.1016/S0305-0548(00)00042-3.

[8]

Y. Liang and F. Zhou, A two-warehouse inventory model for deteriorating items under conditionally permissible delay in payment,, Applied Mathematical Modelling, 35 (2011), 2221. doi: 10.1016/j.apm.2010.11.014.

[9]

B. Mandal and A. K. Pal, Order level inventory system with ramp type demand rate for deteriorating items,, Journal of Interdisciplinary Mathematics, 1 (1998), 49. doi: 10.1080/09720502.1998.10700243.

[10]

T. P. M. Pakkala and K. K. Achary, A deterministic inventory model for deteriorating items with two-warehouses and finite replenishment rate,, European Journal of Operational Research, 57 (1992), 71.

[11]

F. Raafat, Survey of literature on continuously deteriorating inventory model,, Journal of the Operational Research Society, 42 (1991), 27.

[12]

L. Ruxian, L. Hongjie and J. R. Mawhinney, A review on deteriorating inventory study,, Journal of Service Science and Management, 3 (2010), 117.

[13]

K. V. S. Sarma, A deterministic order level inventory model for deteriorating items with two storage facilities,, European Journal of Operational Research, 29 (1987), 70. doi: 10.1016/0377-2217(87)90194-9.

[14]

N. H. Shah, Inventory model for deteriorating items and time value of money for a finite time horizon under the permissible delay in payments,, International Journal of Systems Science, 37 (2006), 9. doi: 10.1080/00207720500404334.

[15]

K. Skouri, I. Konstantaras, S. Papachristos and I. Ganas, Inventory models with ramp type demand rate, partial backlogging and Weibull deterioration rate,, European Journal of Operational Research, 192 (2009), 79. doi: 10.1016/j.ejor.2007.09.003.

[16]

K. Skouri and I. Konstantaras, Order level inventory models for deteriorating seasonable/fashionable products with time-dependent demand and shortages,, Mathematical Problems in Engineering, 2009 (6797). doi: 10.1155/2009/679736.

[17]

J.-W. Wu, C. Lin, B. Tan and W.-C. Lee, An EOQ inventory model with ramp type demand rate for items with Weibull deterioration,, Information and Management Science, 10 (1999), 41.

[18]

K.-S. Wu, An EOQ inventory model for items with Weibull distribution deterioration, ramp type demand rate and partial backlogging,, Production Planning and Control, 12 (2001), 787.

[19]

K.-S. Wu and L.-Y. Ouyang, A replenishment policy for deteriorating items with ramp type demand rate,, Proc. Natl. Sci. Counc. ROC(A), 24 (2000), 279.

[20]

H.-L. Yang, Two-warehouse partial backlogging inventory models for deteriorating items under inflation,, International Journal of Production Economics, 103 (2006), 362.

show all references

References:
[1]

L. Benkherouf, A deterministic order level inventory model for deteriorating items with two storage facilities,, International Journal of Production Economics, 48 (1997), 167.

[2]

A. Goswami and K. S. Chaudhuri, An economic order quantity model for items with two levels of storage for a linear trend in demand,, Journal of the Operational Research Society, 43 (1992), 157.

[3]

S. K. Goyal and B. C. Giri, Recent trends in modeling of deteriorating inventory,, European Journal of Operational Research, 134 (2001), 1. doi: 10.1016/S0377-2217(00)00248-4.

[4]

R. M. Hill, Inventory model for increasing demand followed by level demand,, Journal of the Operational Research Society, 46 (1995), 1250.

[5]

T.-P. Hsieh, C.-Y. Dye and L.-Y. Ouyang, Determining optimal lot size for a two-warehouse system with deterioration and shortages using net present value,, European Journal of Operational Research, 191 (2008), 182. doi: 10.1016/j.ejor.2007.08.020.

[6]

M. D. Intriligator, "Mathematical Optimization and Economic Theory,", Philadelphia, (2002). doi: 10.1137/1.9780898719215.

[7]

S. Kar, A. K. Bhunia and M. Maiti, Deterministic inventory model with two levels of storage, a linear trend in demand and a fixed time horizon,, Computers and Operations Research, 28 (2001), 1315. doi: 10.1016/S0305-0548(00)00042-3.

[8]

Y. Liang and F. Zhou, A two-warehouse inventory model for deteriorating items under conditionally permissible delay in payment,, Applied Mathematical Modelling, 35 (2011), 2221. doi: 10.1016/j.apm.2010.11.014.

[9]

B. Mandal and A. K. Pal, Order level inventory system with ramp type demand rate for deteriorating items,, Journal of Interdisciplinary Mathematics, 1 (1998), 49. doi: 10.1080/09720502.1998.10700243.

[10]

T. P. M. Pakkala and K. K. Achary, A deterministic inventory model for deteriorating items with two-warehouses and finite replenishment rate,, European Journal of Operational Research, 57 (1992), 71.

[11]

F. Raafat, Survey of literature on continuously deteriorating inventory model,, Journal of the Operational Research Society, 42 (1991), 27.

[12]

L. Ruxian, L. Hongjie and J. R. Mawhinney, A review on deteriorating inventory study,, Journal of Service Science and Management, 3 (2010), 117.

[13]

K. V. S. Sarma, A deterministic order level inventory model for deteriorating items with two storage facilities,, European Journal of Operational Research, 29 (1987), 70. doi: 10.1016/0377-2217(87)90194-9.

[14]

N. H. Shah, Inventory model for deteriorating items and time value of money for a finite time horizon under the permissible delay in payments,, International Journal of Systems Science, 37 (2006), 9. doi: 10.1080/00207720500404334.

[15]

K. Skouri, I. Konstantaras, S. Papachristos and I. Ganas, Inventory models with ramp type demand rate, partial backlogging and Weibull deterioration rate,, European Journal of Operational Research, 192 (2009), 79. doi: 10.1016/j.ejor.2007.09.003.

[16]

K. Skouri and I. Konstantaras, Order level inventory models for deteriorating seasonable/fashionable products with time-dependent demand and shortages,, Mathematical Problems in Engineering, 2009 (6797). doi: 10.1155/2009/679736.

[17]

J.-W. Wu, C. Lin, B. Tan and W.-C. Lee, An EOQ inventory model with ramp type demand rate for items with Weibull deterioration,, Information and Management Science, 10 (1999), 41.

[18]

K.-S. Wu, An EOQ inventory model for items with Weibull distribution deterioration, ramp type demand rate and partial backlogging,, Production Planning and Control, 12 (2001), 787.

[19]

K.-S. Wu and L.-Y. Ouyang, A replenishment policy for deteriorating items with ramp type demand rate,, Proc. Natl. Sci. Counc. ROC(A), 24 (2000), 279.

[20]

H.-L. Yang, Two-warehouse partial backlogging inventory models for deteriorating items under inflation,, International Journal of Production Economics, 103 (2006), 362.

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