Aditi Khanna

Two-warehouse partial backlogging inventory model for deteriorating items with linear trend in demand under inflationary conditions

In todays business transactions, there are various reasons, namely, bulk purchase discounts, re-ordering costs, seasonality of products, inflation induced demand, etc., which force the buyer to order more than the warehouse capacity. Such situations call for additional storage space to store the excess units purchased. This additional storage space is typically a rented warehouse. Inflation plays a very interesting and significant role here: It increases the cost of goods. To safeguard from the rising prices, during the inflation regime, the organisation prefers to keep a higher inventory, thereby increasing the aggregate demand. This additional inventory needs additional storage space, which is facilitated by a rented warehouse. Ignoring the effects of the time value of money and inflation might yield misleading results. In this study, a two-warehouse inventory model with linear trend in demand under inflationary conditions having different rates of deterioration has been developed. Shortages at the owned warehouse are also allowed subject to partial backlogging. The solution methodology provided in the model helps to decide on the feasibility of renting a warehouse. Finally, findings have been illustrated with the help of numerical examples. Comprehensive sensitivity analysis has also been provided.

Supply chain model for deteriorating items with stock-dependent consumption rate and shortages under inflation and permissible delay in payment

In todays world the financial decisions of any business/retail enterprise are very crucial, as from the financial standpoint, an inventory i.e., stock on display represents a capital investment and must compete with other assets for a firms limited capital funds. Moreover, rising inflation rate directly affects the financial situation of an organization. On the contrary, the todays market is totally customer oriented which forces the retailer to invest more on stock in order to attract more and more customers. Further, this situation becomes more challenging when the retailer is dealing with deteriorating items. Apart from all this, the trade credit also plays a vital role in the financial decision making, as it helps in reducing the costs of holding stock. Keeping such a scenario in mind, this paper develops an inventory model for deteriorating items with stock-dependent consumption rate and allowable shortages under inflation and permissible delay in payments. Finally the model has been validated through numerical examples.

Effects of inspection on retailer's ordering policy for deteriorating items with time-dependent demand under inflationary conditions

In this article, an Economic Order Quantity (EOQ) model has been developed with unreliable supply, where each received lot may have random fraction of defective items with known distribution. Thus, the inspection of lot becomes essential in almost all the situations. Moreover, its role becomes more significant when the items are deteriorating in nature. It is assumed that defective items are salvaged as a single batch after the screening process. Further, it has been observed that the demand as well as price for certain consumer items increases linearly with time, especially under inflationary conditions. Owing to this fact, this article investigates the impact of defective items on retailers ordering policy for deteriorating items under inflation when both demand and price vary with the passage of time. The proposed model optimises the order quantity by maximising the retailers expected profit. Results are demonstrated with the help of a numerical example and the sensitivity analysis is also presented to provide managerial insights into practice.

The retailer's procurement policy with credit-linked demand under inflationary conditions

The one-stage credit policy is a situation that arises, under a permissible delay in payments, when the supplier offers a credit period to the retailer, but the latter does not offer any credit period to his/her customers. However, this type of credit policy is debatable in most business transactions. In reality, the retailer also adopts the credit policy to stimulate his/her own demand. Such a situation, where both the supplier and the retailer offer the credit period to their respective customers, is termed two-stage credit policy. Moreover, nowadays it is a well-known fact that the credit period offered by the retailer to the customers has a positive impact on the demand of an item. Keeping this in mind, a credit-linked demand function has been considered. Further, the inflation and time value of money also play a very vital role in determining the procurement policy of the retailer, specifically in developing countries. Based upon these arguments, the present paper addresses the retailers procurement policy, where the decision is influenced by the inflation and time value of money under a permissible delay in payments, for a credit-linked demand function. The main objective is to maximise the retailers profit by jointly optimising his credit as well as the procurement period. Results have been illustrated with the help of a numerical example. Computational results provide some interesting policy implications.

Ordering Policy in a Two-Warehouse Environment for Deteriorating Items with Shortages under Inflationary Conditions

In this paper, the two-warehouse inventory problem is considered for deteriorating items with constant demand rate and shortages under inflationary conditions. In todays unstable global economy, the effects of inflation and time value of money cannot be ignored; as it increases the cost of goods. To safeguard from the rising prices, during the inflation regime, the organization prefers to keep a higher inventory, thereby increasing the aggregate demand. This additional inventory needs additional storage space that is facilitated by a rented warehouse. Further ahead, in the real business world, to retain the freshness of the commodity, most of the organizations adopt the first-in-first-out FIFO dispatching policy. FIFO policy yields fresh and good conditioned stock thereby resulting in customer satisfaction, especially when items are deteriorating in nature. However, the two warehousing systems usually assume that the holding cost of items is more in RW than the OW due to modern preserving techniques. Therefore, to reduce the inventory costs, it is economical to consume the goods of RW at the earliest. This approach is termed as Last-In-First-Out LIFO approach. The objective of the present research is to develop a two warehouse inventory model with FIFO and LIFO dispatching policies under inflationary conditions. Further, comparison between FIFO and LIFO policies has been exhibited with the help of a numerical example. Sensitivity analysis has also been performed to study the impact of various parameters on the optimal solution.

Credit financing for deteriorating imperfect-quality items under inflationary conditions

In today’s technology-driven world, despite of efficient planning of manufacturing system and emergence of sophisticated production methods and control systems; the items produced have some fraction of defectives. However, these defective items can be removed from the lot through a screening process. Thus, the inspection of lot becomes essential, especially when items are deteriorating in nature. Further, in today’s uncertain global economy, due to rising inflation there is a consequent decline in the real value of money, which eventually forces the supplier to provide an attractive tradecredit policy to the retailer. Keeping this scenario in mind, an attempt has been made to formulate an inventory policy for a retailer dealing with imperfect quality items of deteriorating nature under inflation and permissible delay in payments. Results have been demonstrated with the help of a numerical example and sensitivity analysis is also presented to provide managerial insights into practice.

Retailer's ordering policy for deteriorating imperfect quality items when demand and price are time-dependent under inflationary conditions and permissible delay in payments

The present paper investigates an inventory model with unreliable supply, where each received lot may have a random fraction of defective items with known distribution. Thus, the inspection of lot becomes essential in almost all the situations, especially when the items are of deteriorating in nature. Moreover, in todays competition inherited business world, organisations use many promotional tools in order to increase their sales. One such tool is a permissible delay in payments, i.e., the buyer does not have to pay for the goods purchased immediately rather can defer the payment for a prescribed period given by the supplier. Further, in todays wobbling economy, especially for long-term investment, the effects of inflation cannot be disregarded as uncertainty about future inflation may influence the ordering policy. Being motivated by these aspects, the present paper investigates the impact of inspection on retailers ordering policy for deteriorating items under permissible delay in payments when demand and price both varies with the passage of time. Finally, the model has been analysed and validated with the help of numerical examples. A comprehensive sensitivity analysis is also presented which provides important managerial implications.

Production inventory policies for defective items with inspection errors, sales return, imperfect rework process and backorders

In order to sustain the challenges of maintaining good quality and perfect screening process, rework process becomes a rescue to compensate for the imperfections present in the production system. The proposed model attempts to explore the existing real-life situation with a more practical approach by incorporating the concept of imperfect rework as this occurs as an unavoidable problem to the firm due to irreparable disorders even in the reworked items. Hence, a production inventory model is formulated here to study the combined effect of imperfect quality items, faulty inspection process and imperfect rework process on the optimal production quantity and optimal backorder level. An analytical method is employed to maximize the expected total profit per unit time. Moreover, the results of several previous research articles namely Chiu et al (2006), Chiu et al (2005), Salameh and Hayek (2001), and classical EPQ with shortages are deduced as special cases. To demonstrate the applicability of the model, and ...

Joint optimization of retailer’s unit selling price and cycle length under two-stage credit policy when the end demand is price as well as credit period sensitive

In most of the inventory models with trade credit, it is assumed that the supplier would offer a credit period to the retailer but the retailer in turn would not offer any credit period to his customers, which is termed as one stage credit policy, but this type of credit policy is debatable in most business transactions. As in reality, most of the retailer’s do offer the credit period to his customers in order to stimulate their demand. Such a situation where both the supplier as well as the retailer offers the credit period to their respective customers is known as two-stage credit policy. Although the presence of credit period has been incorporated in many inventory models but the impact of credit period on demand is unfortunately ignored. In reality, it is observed that demand of an item does depend upon the length of the credit period as well as price offered by the retailer. In order to incorporate this phenomenon, an inventory model has been developed, considering that the retailer’s sales are divided in two categories (i) on cash, (which is price sensitive) and (ii) on credit, (which is a function of customer’s credit period and price). A solution procedure is provided for determining the retailer’s optimal price and cycle length simultaneously. Finally, the results have been validated by numerical example.

Inventory Decisions for Imperfect Quality Deteriorating Items with Exponential Declining Demand Under Trade Credit and Partially Backlogged Shortages

In the current time frame where excessive competition exists among various enterprises, the trade credit policy has been proven as a crucial instrument for monetary development among enterprises. The main advantage of using delay period is that it helps to have savings in the purchase as well as opportunity cost. Moreover, to surpass the extreme rivalry, companies have to construct an optimum strategy that increases their market value and maximizes their ultimate profit. In view of this, the production systems are built for smooth and continuous operation; however the possibility of discrepancy in production system cannot be removed entirely. As a result, each manufactured/procured lot may contain a portion of defective items that can differ from one process to another. Also, the condition is more vulnerable when the products are prone to deterioration. Nevertheless, by vigilant inspection process, the defectives can be separated from the perfect batch. Therefore, to include screening process is requisite as the market is entirely slanted toward customer. Thus, the present model is developed by keeping the above scenarios in mind. The formulated inventory model for a retailer examines the optimal shortage point and cycle length considering imperfect quality and deterioration with trade credit. Shortages are permitted and are backlogged partially. It is also considered that demand of a product has an exponential declining rate, and the rate of backlogging has an inverse relation with the waiting time interval for the subsequent replenishment. In addition, a numerical example is presented to exemplify the model, and further, the sensitivity analysis is carried out that provides essential decision-making implications.