A Two-Warehouse Model for Deteriorating Items with Holding Cost under Particle Swarm Optimization

A deterministic inventory model has been developed for deteriorating items and Particle Swarm Optimization (PSO) having a ramp type demands with the effects of inflation with two-warehouse facilities. The owned warehouse (OW) has a fixed capacity of W units; the rented warehouse (RW) has unlimited capacity. Here, we assumed that the inventory holding cost in RW is higher than those in OW. Shortages in inventory are allowed and partially backlogged and Particle Swarm Optimization (PSO) it is assumed that the inventory deteriorates over time at a variable deterioration rate. The effect of inflation has also been considered for various costs associated with the inventory system and Particle Swarm Optimization (PSO). Numerical example is also used to study the behaviour of the model. Cost minimization technique is used to get the expressions for total cost and other parameters

An Inventory Model for Perishable Products with Stock-Dependent Demand and Trade Credit under Inflation

We consider an inventory model for perishable products with stock-dependent demand under inflation. It is assumed that the supplier offers a credit period to the retailer, and the length of credit period is dependent on the order quantity. The retailer does not need to pay the purchasing cost until the end of credit period. If the revenue earned by the end of credit period is enough to pay the purchasing cost or there is budget, the balance is settled and the supplier does not charge any interest. Otherwise, the supplier charges interest for unpaid balance after credit period, and the interest and the remaining payments are made at the end of the replenishment cycle. The objective is to minimize the retailer’s (net) present value of cost. We show that there is an optimal cycle length to minimize the present value of cost; furthermore, a solution procedure is given to find the optimal solution. Numerical experiments are provided to illustrate the proposed model

Inventory Model with Time-Dependent Holding cost under Inflation when Seller Credits to Order Quantity

In this study an inventory model is developed under which the seller provides the retailer a permissible delay in payments, if the retailer orders a large quantity. In this paper we establish an inventory model for non deteriorating items and time dependent holding cost under inflation when seller offers permissible delay to the retailer, if the order quantity is greater than or equal to a predetermined quantity. We then obtain optimal solution for finding optimal order quantity, optimal replenishment time and optimal total relevant cost. Finally, numerical example is given to illustrate the theoretical results and made sensitive analysis of various parameters on the optimal solution

Planning for shortages? Net present value analysis for a deteriorating item with partial backlogging

This paper develops inventory models to help answer strategic questions concerning whether planning for shortages offers financial benefits. A production-inventory system producing a deteriorating product in batches at a finite production rate with partial backordering is considered. Customers pay a deposit when placing a backorder. Backordered items receive a discount on the sales price. As lost sales may lead to customers not returning, the demand rate may depend on the fraction of lost sales. We develop a cash-flow based profit maximising Net Present Value (NPV) model without the inventory cost parameters commonly used in this context: unit holding cost, unit backorder cost, unit deterioration cost, and unit lost sales cost. The model finds the optimal inventory policy just like NPV models that discount the traditional parameters but has the advantage of not needing to estimate the value of the traditional parameters. It is shown that in models based on discounting the traditional parameters, the parameters are not exogenously determinable but are non-trivial functions of non-financial endogenous system parameters such as the production rate, annual demand rate, and backorder rate. Extensive numerical experiments illustrate how cash-flow NPV models provide insights into the value of planning for shortages and strategic choices about the design of the production-inventory system. It also provides insight into the classical problem of how to interpret unit backorder cost and unit lost sales cost. The study indicates that these insights cannot be reliably obtained from NPV models based on discounting unit backorder costs and unit lost sales costs.<br/

Supply chain finance for ameliorating and deteriorating products: a systematic literature review

Ameliorating and deteriorating products, or, more generally, items that change value over time, present a high sensitiveness to the surrounding environment (e.g., temperature, humidity, and light intensity). For this reason, they should be properly stored along the supply chain to guarantee the desired quality to the consumers. Specifically, ameliorating items face an increase in value if there are stored for longer periods, which can lead to higher selling price. At the same time, the costumers’ demand is sensitive to the price (i.e., the higher the selling price the lower the final demand), sensitiveness that is related to the quality of the products (i.e., lower sensitiveness for high-quality products). On the contrary, deteriorating items lose quality and value over time which result in revenue losses due to lost sales or reduced selling price. Since these products need to be properly stored (i.e., usually in temperature- and humidity-controlled warehouses) the holding costs, which comprise also the energy costs, may be particularly relevant impacting on the economic, environmental, and social sustainability of the supply chain. Furthermore, due to the recent economic crisis, companies (especially, small and medium enterprises) face payment difficulties of customers and high volatility of resources prices. This increases the risk of insolvency and on the other hand the financing needs. In this context, supply chain finance emerged as a mean for efficiency by coordinating the financial flow and providing a set of financial schemes aiming at optimizing accounts payable and receivable along the supply chain. The aim of the present study is thus to investigate through a systematic literature review the two main themes presented (i.e., inventory management models for products that change value over time, and financial techniques and strategies to support companies in inventory management) to understand if any financial technique has been studied for supporting the management of this class of products and to verify the existing literature gap

Optimal Deteriorating Inventory Models for Varies Supply Life Cycles

Agriculture items, such as fruits and vegetables, have different supply and demand characteristics during a harvest period. Fruits supply in the first and end of harvest time are not reliable so sometimes supply are not available when needed. Fruits demand is different during harvest season. In the first harvest season, demand depends on price and at the end of harvest time, the demand depends on presentation of the items. In this study, inventory deteriorating items models for the first and the end of the harvest season are developed. Since closed-form solutions cannot be derived from the models, a Genetic Algorithm and a heuristic method are used to solve the problems. A numerical example and sensitivity analysis are conducted to illustrate the model and get insights. The sensitivity analysis shows that the supplier will increase his price when supply is not reliable at the early harvest period.  The results show that the unreliable supply is susceptible to the total cost at the end of the harvest period

Deterministic EOQ models for non linear time induced demand and different holding cost functions

This paper presents an Economic order quantity (EOQ) model for deteriorating items. The demand rate is non-linear function of time. In this paper two models have been derived for different holding costs (i) The holding cost is linear function of the on hand inventory level. (ii). A non-linear function of time for which the item is kept in the stock. Optimization is done for both the models and numerical examples are presented to check the feasibility of the optimal solutions. Sensitivity analysis is also presented with respect to the various parameters used in the numerical example