Journal of Business and Management Sciences
ISSN (Print): 2333-4495 ISSN (Online): 2333-4533 Website: http://www.sciepub.com/journal/jbms Editor-in-chief: Heap-Yih Chong
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Journal of Business and Management Sciences. 2014, 2(3A), 21-28
DOI: 10.12691/jbms-2-3A-3
Open AccessResearch Article

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

Monalisha Pattnaik1, , Purnima Nayak2 and Chandni Agarawal1

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

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

Pub. Date: August 25, 2014
(This article belongs to the Special Issue Emerging Trends in Production Research: Concepts and Cases)

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

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