Open AccessReplenishment Model with Entropic Order Quantity for Deteriorating Items under Inflation
Author(s) -
Praveen Tripathy,
Anima Bag
Publication year - 2021
Publication title -
asian journal of probability and statistics
Language(s) - English
Resource type - Journals
ISSN - 2582-0230
DOI - 10.9734/ajpas/2021/v14i330331
Subject(s) - purchasing , economic shortage , total cost , order (exchange) , minification , holding cost , stock (firearms) , economics , inflation (cosmology) , econometrics , microeconomics , computer science , operations research , operations management , mathematical optimization , mathematics , finance , engineering , mechanical engineering , linguistics , philosophy , physics , government (linguistics) , theoretical physics
The purpose of the current paper is to determine an optimal order quantity so as to minimize the total cost of the inventory system of a business enterprise. The model is developed for deteriorating items with stock and selling price dependent demand under inflation without permitting shortage. Optimal solution is achieved by cost minimization strategy considering replenishment cost, purchase cost, holding cost and deterioration cost with a special approach to entropy cost for bulk size purchasing units. The effectiveness of the proposed model has been avowed through empirical investigation. Sensitivity analysis has been accomplished to deduce managerial insights. Findings suggest that an increased inflationary effect results in increment in the system total cost. The paper can be extended by allowing shortage. The model can be utilized in the business firms dealing with bulk purchasing units of electric equipments, semiconductor devices, photographic films and many more.