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

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

Huachun Xiong, Jinxing Xie, Bo Niu
Copyright: © 2013 |Pages: 22
ISBN13: 9781466629257|ISBN10: 1466629258|EISBN13: 9781466629264
DOI: 10.4018/978-1-4666-2925-7.ch018
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MLA

Xiong, Huachun, et al. "Comments on Two Models for Operating Two-Warehouse Inventory Systems with Deteriorating Items and Inflationary Effects." Optimizing, Innovating, and Capitalizing on Information Systems for Operations, edited by John Wang, IGI Global, 2013, pp. 349-370. https://doi.org/10.4018/978-1-4666-2925-7.ch018

APA

Xiong, H., Xie, J., & Niu, B. (2013). Comments on Two Models for Operating Two-Warehouse Inventory Systems with Deteriorating Items and Inflationary Effects. In J. Wang (Ed.), Optimizing, Innovating, and Capitalizing on Information Systems for Operations (pp. 349-370). IGI Global. https://doi.org/10.4018/978-1-4666-2925-7.ch018

Chicago

Xiong, Huachun, Jinxing Xie, and Bo Niu. "Comments on Two Models for Operating Two-Warehouse Inventory Systems with Deteriorating Items and Inflationary Effects." In Optimizing, Innovating, and Capitalizing on Information Systems for Operations, edited by John Wang, 349-370. Hershey, PA: IGI Global, 2013. https://doi.org/10.4018/978-1-4666-2925-7.ch018

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Abstract

This paper deals with the two-warehouse partial backlogging inventory problems under inflation for a deteriorating product with a constant demand rate over an infinite horizon. In contrast to the traditional model in which each replenishment cycle starts with an instant replenishment and ends with shortages, an alternative model is proposed in recent literature in which each cycle starts with shortages. It is proven to be less expensive to operate than the traditional model in terms of the present value of the cost per unit time. The present paper points out that the criteria of minimizing the cost per unit time is unreasonable when the inflationary effect is taken into consideration, and instead, the criteria of minimizing the present value of the total cost over the whole infinite planning horizon should be used. The objective functions of these two models are changed and proved that the model with shortages at the start of the cycle is less expensive to operate than the traditional model in terms of the present value of the total cost, but the optimal solutions of the models minimizing the cost per unit time indicate significantly higher total costs.

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