A Two-Storage Inventory Model with Trade Credit Policy and Time-Varying Holding Cost under Quantity Discounts

Abstract

Background: What are the cumulative influences of pricing, promotions of commodities, order size-based discount opportunities, and alternative warehousing scenarios on effective decision-making concerning inventory management? It is observed that the prices and promotion of products influence the demand rate. The shortage can be partially backlogged, and the backlogging rate depends on the waiting time. Also, discount and trade credit facilities may be available when purchasing items. This paper describes a novel inventory control model regarding optimal warehousing decision-making scenarios. Methods: This paper includes the facts in its hypothesis and examines the overall impact of the mentioned issues on profitability. The inventory carrying scheme associated with the proposed model consists of both rented and owned warehouse facilities in which the cost increases linearly with time. The numerical and visual simulation succeeds the mathematical approach to analyze the proposed inventory model in Mathematica software. Results: The results show that a price hike enhances profit despite the negative impact on demand creation. Also, promotion frequency favors profitability, suppressing the corresponding costs. Another managerial intuition is revealed through the numerical result that the stock should be held in a rented warehouse when deterioration in the owned warehouse increases, despite the cost of a rented warehouse. Conclusions: Besides several mentioned management insights, this study includes several existing models as particular cases and tackles challenges in the analytical optimization approach. This study leads toward the consequences of future research scopes with industry-based raw data.

The Existence and Uniqueness Conditions for Solving Neutrosophic Differential Equations and Its Consequence on Optimal Order Quantity Strategy

“…We have kept our analysis brief because the primary focus was not on the inventory model. However, in the future, it can be extended by adding deterioration, time-dependent holding cost, partial backlogging shortage, all-unit quantity discount policy, and trade credit policy such as Momena et al [54].…”

A sustainable production inventory model for two deteriorating complementary products under preservation technology and carbon cap regulation

“…Some researcher introduced this type of backordering in their inventory modelling (Taleizadeh [56], Sahoo et al [57], Mashud et al [58]). Later, various researcher has taken the partial backordering rate is inversely proportional to the customer waiting time in inventory control policy such as Sarkar and Sarkar [59], Bhunia et al [60], Dutta and Kumar [61], Shaikh et al [62], Momena et al [63]; whereas Tiwari et al [64], Pal and Adhikari [65], Palanivel and Suganya [66], Adak and Mahapatra [67] are taken the partial backlogging rate is dependent on customer waiting time exponentially. In this article we assume that the retailer faces partial backlogged shortages which is inversely proportional to the customer waiting time.…”