Partial backordering inventory model with limited storage capacity under order-size dependent trade credit
This study formulates an inventory model with limited storage capacity under the condition of order-size dependent trade credit. Shortages are allowed and partially backlogged. The objective of this study is to determine the optimal replenishment cycle length, the optimal fraction of no shortage, a...
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Vilnius Gediminas Technical University
2021
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oai:doaj.org-article:481803c7fa974e1a99d45f6f76d280892021-11-17T16:03:39ZPartial backordering inventory model with limited storage capacity under order-size dependent trade credit10.3846/tede.2021.157042029-49132029-4921https://doaj.org/article/481803c7fa974e1a99d45f6f76d280892021-11-01T00:00:00Zhttps://www.bme.vgtu.lt/index.php/TEDE/article/view/15704https://doaj.org/toc/2029-4913https://doaj.org/toc/2029-4921 This study formulates an inventory model with limited storage capacity under the condition of order-size dependent trade credit. Shortages are allowed and partially backlogged. The objective of this study is to determine the optimal replenishment cycle length, the optimal fraction of no shortage, and whether retailers should choose to rent an extra warehouse to store more items, such that retailers’ total annual profit is maximized. We prove the global optimally of objective functions and derive the closed-form optimal solution. Some numerical examples are presented to illustrate the applicability of the proposed model. Sensitivity analysis is carried out and managerial insights are obtained. We find that if retailers’ own warehouse capacity is relatively small, they always benefit from enlarging order quantity and renting an extra warehouse; meanwhile, suppliers further prolong the credit period is beneficial for both parties. On the contrary, as retailers’ own warehouse capacity increases and exceeds the optimal order quantity under that of without capacity constraints, adopting the same replenishment strategy as that without capacity constraints is profitable for retailers. Our results also reveal that other model parameters (e.g., ordering cost, inventory holding cost, shortages cost, backordering rate, etc.) have a significant impact on retailers’ optimal decisions. First published online 17 November 2021 Wen-Hui JiangLing XuZhen-Song ChenWitold PedryczKwai-Sang ChinVilnius Gediminas Technical Universityarticleinventoryorder-size dependent trade creditlimited storage capacitypartial backorderingEconomic growth, development, planningHD72-88BusinessHF5001-6182ENTechnological and Economic Development of Economy (2021) |
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inventory order-size dependent trade credit limited storage capacity partial backordering Economic growth, development, planning HD72-88 Business HF5001-6182 |
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inventory order-size dependent trade credit limited storage capacity partial backordering Economic growth, development, planning HD72-88 Business HF5001-6182 Wen-Hui Jiang Ling Xu Zhen-Song Chen Witold Pedrycz Kwai-Sang Chin Partial backordering inventory model with limited storage capacity under order-size dependent trade credit |
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This study formulates an inventory model with limited storage capacity under the condition of order-size dependent trade credit. Shortages are allowed and partially backlogged. The objective of this study is to determine the optimal replenishment cycle length, the optimal fraction of no shortage, and whether retailers should choose to rent an extra warehouse to store more items, such that retailers’ total annual profit is maximized. We prove the global optimally of objective functions and derive the closed-form optimal solution. Some numerical examples are presented to illustrate the applicability of the proposed model. Sensitivity analysis is carried out and managerial insights are obtained. We find that if retailers’ own warehouse capacity is relatively small, they always benefit from enlarging order quantity and renting an extra warehouse; meanwhile, suppliers further prolong the credit period is beneficial for both parties. On the contrary, as retailers’ own warehouse capacity increases and exceeds the optimal order quantity under that of without capacity constraints, adopting the same replenishment strategy as that without capacity constraints is profitable for retailers. Our results also reveal that other model parameters (e.g., ordering cost, inventory holding cost, shortages cost, backordering rate, etc.) have a significant impact on retailers’ optimal decisions.
First published online 17 November 2021
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format |
article |
author |
Wen-Hui Jiang Ling Xu Zhen-Song Chen Witold Pedrycz Kwai-Sang Chin |
author_facet |
Wen-Hui Jiang Ling Xu Zhen-Song Chen Witold Pedrycz Kwai-Sang Chin |
author_sort |
Wen-Hui Jiang |
title |
Partial backordering inventory model with limited storage capacity under order-size dependent trade credit |
title_short |
Partial backordering inventory model with limited storage capacity under order-size dependent trade credit |
title_full |
Partial backordering inventory model with limited storage capacity under order-size dependent trade credit |
title_fullStr |
Partial backordering inventory model with limited storage capacity under order-size dependent trade credit |
title_full_unstemmed |
Partial backordering inventory model with limited storage capacity under order-size dependent trade credit |
title_sort |
partial backordering inventory model with limited storage capacity under order-size dependent trade credit |
publisher |
Vilnius Gediminas Technical University |
publishDate |
2021 |
url |
https://doaj.org/article/481803c7fa974e1a99d45f6f76d28089 |
work_keys_str_mv |
AT wenhuijiang partialbackorderinginventorymodelwithlimitedstoragecapacityunderordersizedependenttradecredit AT lingxu partialbackorderinginventorymodelwithlimitedstoragecapacityunderordersizedependenttradecredit AT zhensongchen partialbackorderinginventorymodelwithlimitedstoragecapacityunderordersizedependenttradecredit AT witoldpedrycz partialbackorderinginventorymodelwithlimitedstoragecapacityunderordersizedependenttradecredit AT kwaisangchin partialbackorderinginventorymodelwithlimitedstoragecapacityunderordersizedependenttradecredit |
_version_ |
1718425413271683072 |