Comments on Two Models for Operating Two-Warehouse Inventory Systems with Deteriorating Items and Inflationary Effects

Introduction

The inventory problem for deteriorating items with deterministic demand rates has been studied extensively in the literature. Nahmias (1982), and Goyal and Giri (2001) provided excellent reviews for research works in this field before 1980s and 2000s respectively. The problem attracts growing interests from researchers thereafter (Dye et al., 2007a & 2007b; Shah et al., 2009; Teng et al., 2002). In contrast to the studies that assume an organization owns only a single warehouse with unlimited capacity, the last decade sees an explosive number of studies focusing on two warehouses, i.e., an owned warehouse (OW) with limited capacity and a rented warehouse (RW) which is assumed to be available with abundant capacity. An early discussion on the effect of two warehouses can be traced back to Hartely (1976), and recently the two-warehouse inventory models have been considered by many other researchers (Chung et al., 2009; Dey et al., 2007b, 2008; Gayen & Pal, 2009; Hsieh et al., 2008; Lee & Hsu, 2009; Niu & Xie, 2008; Rong et al., 2008; Wee et al., 2005; Yang, 2004, 2006; Zhou, 2003; Zhou & Yang, 2005).

In traditional inventory models, it is generally assumed that each replenishment cycle starts with an instant replenishment and ends with shortages. In a recent paper, Yang (2004) considered the two-warehouse inventory problem for deteriorating items with shortages under inflation, and proposed an alternative model in which each cycle begins with shortages and ends without shortages. Under some assumptions, he proved that the model with shortages at the start of the cycle is less expensive to operate than the traditional models under the objective of minimizing the cost per unit time. More recently, Yang (2006) extended the completely backlogging model to incorporate partial backlogging.