Optimization in Deteriorated Inventory Model Incorporated with Percentage Loss, Promotion and Functional Ordering Cost: A Comparative Analysis

Monalisha Pattnaik^1, , Purnima Nayak² and Chandni Agarawal¹

¹Department of Business Administration, Utkal University, Bhubaneswar, India

²Department Mathematics, P.N. (Auto) College, Khorda, Bhubaneswar

Cite this paper

Monalisha Pattnaik, Purnima Nayak and Chandni Agarawal. Optimization in Deteriorated Inventory Model Incorporated with Percentage Loss, Promotion and Functional Ordering Cost: A Comparative Analysis. Journal of Business and Management Sciences. 2014; 2(3A):21-28. doi: 10.12691/JBMS-2-3A-3

Abstract

This paper explores the instantaneous economic order quantity model by allocating the percentage of units lost due to deterioration in an on-hand inventory by framing promotional effort cost and variable ordering cost. The objective is to maximize the net profit so as to determine the order quantity, promotional effort factor, the cycle length and number of units lost due to deterioration. For any given number of replenishment cycles the existence of a unique optimal replenishment schedule are proved and mathematical model is developed to find some important characteristics for the concavity of the net profit function. Numerical examples are provided to illustrate the results of proposed model which benefit the retailer and this policy is important, especially for wasting of deteriorating items. Finally, sensitivity analyses of the optimal solution with respect to the major parameters and comparative analysis of different related EOQ models are also carried out.

Keywords

optimization, inventory, EOQ, deterioration, percentage units lost, promotional effort cost, variable ordering cost, comparative analysis

Copyright

This work is licensed under a Creative Commons Attribution 4.0 International License. To view a copy of this license, visit http://creativecommons.org/licenses/by/4.0/

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