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A production-inventory model with promotional effort, variable production cost and probabilistic deterioration

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  • M. Palanivel

    (The Gandhigram Rural Institute, Deemed University)

  • R. Uthayakumar

    (The Gandhigram Rural Institute, Deemed University)

Abstract

This article presents an economic production quantity (EPQ) model for deteriorating items involving probabilistic deterioration where the demand is dependent on sales team’s initiatives. Here, we assumed that the production rate is variable and the unit production cost is the function of the production rate. The unit selling price is calculated by a mark-up over the unit production cost. This model aids in minimizing the total inventory cost of the manufacturer by finding the optimal cycle length and the quantity. On this backdrop, a few theorems have been developed and, the necessary and sufficient conditions of the existence and uniqueness of the optimal solutions are suggested. Moreover, numerical examples and sensitivity analysis were also carried out. The results reveal that the total cost will be minimized when the deterioration follows uniform distribution and when the initiatives of the sales team equal to one.

Suggested Citation

  • M. Palanivel & R. Uthayakumar, 2017. "A production-inventory model with promotional effort, variable production cost and probabilistic deterioration," International Journal of System Assurance Engineering and Management, Springer;The Society for Reliability, Engineering Quality and Operations Management (SREQOM),India, and Division of Operation and Maintenance, Lulea University of Technology, Sweden, vol. 8(1), pages 290-300, January.
    • Handle: RePEc:spr:ijsaem:v:8:y:2017:i:1:d:10.1007_s13198-015-0345-7
    DOI: 10.1007/s13198-015-0345-7
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    References listed on IDEAS

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    1. Guchhait, Partha & Kumar Maiti, Manas & Maiti, Manoranjan, 2013. "Production-inventory models for a damageable item with variable demands and inventory costs in an imperfect production process," International Journal of Production Economics, Elsevier, vol. 144(1), pages 180-188.
    2. Harish Krishnan & Roman Kapuscinski & David A. Butz, 2004. "Coordinating Contracts for Decentralized Supply Chains with Retailer Promotional Effort," Management Science, INFORMS, vol. 50(1), pages 48-63, January.
    3. Cárdenas-Barrón, Leopoldo Eduardo & Sana, Shib Sankar, 2014. "A production-inventory model for a two-echelon supply chain when demand is dependent on sales teams׳ initiatives," International Journal of Production Economics, Elsevier, vol. 155(C), pages 249-258.
    4. Terry A. Taylor, 2002. "Supply Chain Coordination Under Channel Rebates with Sales Effort Effects," Management Science, INFORMS, vol. 48(8), pages 992-1007, August.
    5. Sarkar, Mitali & Sarkar, Biswajit, 2013. "An economic manufacturing quantity model with probabilistic deterioration in a production system," Economic Modelling, Elsevier, vol. 31(C), pages 245-252.
    6. Sana, Shib Sankar, 2013. "Sales team's initiatives and stock sensitive demand — A production control policy," Economic Modelling, Elsevier, vol. 31(C), pages 783-788.
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    Cited by:

    1. Ata Allah Taleizadeh & Kannan Govindan & Nasim Ebrahimi, 2020. "The effect of promotional cost sharing on the decisions of two-level supply chain with uncertain demand," Annals of Operations Research, Springer, vol. 290(1), pages 747-781, July.
    2. Rini & Priyamvada & Chandra K. Jaggi, 2021. "Sustainable and flexible production system for a deteriorating item with quality consideration," International Journal of System Assurance Engineering and Management, Springer;The Society for Reliability, Engineering Quality and Operations Management (SREQOM),India, and Division of Operation and Maintenance, Lulea University of Technology, Sweden, vol. 12(5), pages 951-960, October.
    3. Glock, Christoph H. & Grosse, Eric H., 2021. "The impact of controllable production rates on the performance of inventory systems: A systematic review of the literature," European Journal of Operational Research, Elsevier, vol. 288(3), pages 703-720.
    4. Shunlin Wang & Yifang Chen, 2022. "Consumption Coupons, Consumption Probability and Inventory Optimization: An Improved Minimum-Cost Maximum-Flow Approach," Sustainability, MDPI, vol. 14(13), pages 1-14, June.

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