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Optimal Inventory Management Policies for Substitutable Products Considering Non-instantaneous Decay and Cost of Substitution

In: Applications of Operational Research in Business and Industries

Author

Listed:
  • Ranu Singh

    (Madan Mohan Malaviya University of Technology)

  • Vinod Kumar Mishra

    (Madan Mohan Malaviya University of Technology)

Abstract

Substitution is an important key of real retail business market. Nowadays, most of retailers offer similar product to the customer in out-of-stock period. This study presents an inventory management approach for substitutable non-instantaneous decaying products under joint ordering policy. This study deals all the possible cases: when a product is completely depleted due to requirement/demand and decay, its demand is partially met by other products, and remain unsatisfied demand is lost. In this article, demand and deterioration rate are taken as deterministic type. The purpose of this article is to find the optimal ordering quantities to optimize the total cost. This article presents solution methodology and provides a numerical simulation to illustrate the model’s application. The numerical result shows a significant reduction in overall cost in the case of with substitution over without substitution case. Finally, the sensitivity of key parameters is examined and concludes this study with some future plans.

Suggested Citation

  • Ranu Singh & Vinod Kumar Mishra, 2023. "Optimal Inventory Management Policies for Substitutable Products Considering Non-instantaneous Decay and Cost of Substitution," Lecture Notes in Operations Research, in: Angappa Gunasekaran & Jai Kishore Sharma & Samarjit Kar (ed.), Applications of Operational Research in Business and Industries, chapter 0, pages 69-81, Springer.
    • Handle: RePEc:spr:lnopch:978-981-19-8012-1_5
    DOI: 10.1007/978-981-19-8012-1_5
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