Optimal inventory replenishment policies for deteriorating items with preservation technology under the effect of advertisement and price reliant demand

Abstract

In an ever-competitive business world, it becomes crucial for a company to sustain itself for its gradual growth and success. It is equally significant that losses due to deterioration in the case of variable demand are also controlled in a market filled with intensifying competition and technological advancement. To compensate, preservation technology investment (PTI) is viewed as a viable option for mitigating deterioration-related losses. The impact of advertising is also a pivotal factor for the product category being marketed. The present research, therefore, proposes to bridge this gap by suggesting a practical method to address preservation technology. The demand is considered to be sensitive towards price and advertisement. Further, to maximise the overall profit, this study performs joint optimisation of selling price, investment in preservation technology, and cycle length. Numerical examples and graphical representations are presented along with the sensitivity analysis to reveal the model's strength. As research tools, Solver and Mathematica are employed to perform the required analysis. The findings suggest the better performance of the developed model when compared with a traditional framework. The developed model applies to perishable produce whose effective management is crucial to satiate the demand of the customers and fetch profits for the organisation.

KEYWORDS:

• Optimization
• inventory
• price and advertisement dependent demand
• preservation technology
• deterioration

Acknowledgment

The authors show their sincere appreciation to the Editor and anonymous reviewers for their insightful feedback in significantly shaping the manuscript. We take this opportunity to express our sincere thanks to Dr. Sumita Puri for assisting in an error-free documentation of the manuscript.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Data availability statement

The authors confirm that the data supporting the findings of this study are available within the article. Derived data supporting the findings of this study are available with the corresponding author on request.