A profit maximization single item inventory problem considering deterioration during carrying for price dependent demand and preservation technology investment

Abstract

This paper addresses a single item two-level supply chain inventory model considering deterioration during carrying of deteriorating item from a suppliera s warehouse to a retailera s warehouse as well as deterioration in the retailera s warehouse. The model assumes preservation technology in the retailera s warehouse to prevent the rate of deterioration. An upper limit for the preservation technology investment has been set as a constraint to the model. The model maximizes the retailera s profit per unit time, simultaneously calculated optimal order quantity. A price dependent demand and storage-time dependent holding cost is considered to develop the model. Some theorems are proven to get optimal values of the total cost. A numerical problem is workout as per the developed algorithm and with the help of MATLAB software to study the applicability of our theoretical results.