Two Warehouse Inventory Model for Deteriorating Items with Trade Credit Under Inflation

Abstract

Establishing warehouses is essential in societies where commercial activities have expanded significantly, making efficient storage a prerequisite for smooth exchange. Variable holding costs play a crucial role in determining warehouse expenses, as these costs typically increase over time. This study examines an inventory model for perishable goods stored in two types of warehouses (rented and owned) under conditions of partial backlogging and inflation. Along with exploring sustainable marketing strategies, the article investigates the connections between product pricing, advertising, and demand, highlight the considerable impact of price reductions and promotions by advertisement. Additionally, this study addresses a trade credit scheme where the supplier grants the retailer a fixed time frame to finalize the account. Top of FormBottom of FormThe research aims to enhance operational efficiency and reduce overall costs by optimizing key decision factors such as storage capacity, credit period, and replenishment time period. To explore the effects on the system’s optimal total cost, along with managerial insights, numerical examples and sensitivity analyses are provided. The model’s outcomes are validated through sensitivity analysis using Mathematica 13.0 software, ensuring their robustness and reliability.