A two-warehouse inventory model with preservation technology investment and partial backlogging

Abstract

In today's global world, preservation technology becomes very important due to rapid changes in environment. To study this concept, in this article, we have developed the two-warehouse inventory model with the consideration of preservation technology investment. Demand rate is treated as linear function of instantaneous stock level. The limited storage area (OW) is used for the storage of the stock. The extra amount of stock beyond the capacity of the Owned Warehouse (OW) is stored in the Rented Warehouse (RW). The holding cost of rented warehouse is greater than the holding cost of Owned Warehouse (OW); thus, the stock of Rented Warehouse (RW) is used first and then, the stock of Owned Warehouse (OW) is consumed. The shortages are allowed and partially backlogged under the effect of inflation. The main aim of this study is to find the optimal value of the total cost function. Numerical illustrations and sensitivity analysis are given at the end of this article.