TWO-WAREHOUSE INVENTORY MODEL WITH PARTIAL BACKORDERING AND WEIBULL DISTRIBUTION DETERIORATION UNDER INFLATION

ABSTRACT

In this study, a two-warehouse inventory model with partial backordering and Weibull distribution deterioration is developed. We consider inflation and apply the discounted cash flow in problem analysis. The discounted cash flow (DCF) and optimization framework are presented to derive the optimal replenishment policy that minimizes the total present value cost per unit time. A numerical example and sensitivity analysis are presented to illustrate the model. When only rented or own warehouse is considered, the present value of the total relevant cost is higher than the case when two-warehouse is considered. From the sensitivity analysis, we show that the total cost of the system is influenced by the deterioration rate, the inflation rate and the backordering ratio.

Keywords:

• Two-warehouse
• Weibull distribution
• Partial backorder
• Inflation