Two-warehouse inventory model for non-instantaneous deteriorating items with partial backlogging and inflation over a finite time horizon

This paper deals with an inventory model for single non – instantaneous deteriorating items with two separate warehouses (one is Owned Warehouse and other is Rented Warehouse) having different preserving facilities. After some fixed period of time, inventory deteriorates in the two warehouses at different constant rates. Demand is assumed to be known and constant. In view of that the effect of inflation and time value of money over a finite planning horizon are employed in this study for optimizing the replenishment lot-size and the time interval simultaneously with the objective of minimizing total cost of the inventory system. Shortages are allowed and partially backlogged with a rate dependent on the duration of waiting time up to the arrival of next lot. The necessary and sufficient conditions for an optimal solution are characterized. In addition, an efficient algorithm is developed to determine the optimal policy, and the computational effort and time are small for the proposed algorithm. It is simple to implement, and our approach is illustrated through some numerical examples to demonstrate the application and the performance of the proposed methodology. Also, the effect of changes in the different parameters on the optimal total cost is graphically presented and the implications are discussed in detail. © 2015, Operational Research Society of India.