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Optimal Base-Stock Inventory-Management Policies of Cement Retailers under Supply-Side Disruptions

Author

Listed:
  • Manik Debnath

    (Department of Mathematics, Indian Institute of Engineering Science and Technology, Shibpur, Kolkata 711103, India)

  • Sanat Kr. Mazumder

    (Department of Mathematics, Indian Institute of Engineering Science and Technology, Shibpur, Kolkata 711103, India)

  • Md Billal Hossain

    (Doctoral School of Economic and Regional Sciences, Hungarian University of Agriculture and Life Sciences, 2100 Godollo, Hungary
    Business Management and Marketing Department, School of Business and Economics, Westminster International University in Tashkent (WIUT), Tashkent 100047, Uzbekistan)

  • Arindam Garai

    (Department of Mathematics, Sonarpur Mahavidyalaya, Rajpur, Kolkata 700149, India)

  • Csaba Balint Illes

    (Hungarian National Bank—Research Center, John Von Neumann University, 6000 Kecskemét, Hungary)

Abstract

The current study aims to identify some optimal base-stock inventory-management policies that maximize the expected long-run profitability of cement retailers under potential supply-side disruptions. Unlike existing articles, the proposed economic order-quantity model considers periodically varying random demand rates of deteriorating items together with partially back-ordered shortages in the face of those random disruptions. This study computes the global concavity to execute the exemplary aspect for the optimal base-stock level under a slew of cost components and a fixed cycle length. Regarding the optimal pricing-related policies, this study proposes that cement retailers should stock from nearby supplier points. Unlike existing articles, we find that changes to either the unit-holding cost or the unit-lost sales cost have hardly any determining effect on the long-run profitability of retailers. When supply-side disruptions are more likely to occur during peak seasons, this study advocates for a planned capacity addition and higher base-stock levels of cement bags.

Suggested Citation

  • Manik Debnath & Sanat Kr. Mazumder & Md Billal Hossain & Arindam Garai & Csaba Balint Illes, 2023. "Optimal Base-Stock Inventory-Management Policies of Cement Retailers under Supply-Side Disruptions," Mathematics, MDPI, vol. 11(18), pages 1-34, September.
    • Handle: RePEc:gam:jmathe:v:11:y:2023:i:18:p:3971-:d:1242739
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    References listed on IDEAS

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