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, an...
| Main Authors: | , , , , |
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| Format: | Article |
| Language: | English |
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Vilnius Gediminas Technical University
2022-01-01
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| Series: | Technological and Economic Development of Economy |
| Subjects: | |
| Online Access: | https://journals.vgtu.lt/index.php/TEDE/article/view/15704 |
| _version_ | 1828876610771615744 |
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| 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 |
| collection | DOAJ |
| description | 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 |
| first_indexed | 2024-12-13T08:23:41Z |
| format | Article |
| id | doaj.art-481803c7fa974e1a99d45f6f76d28089 |
| institution | Directory Open Access Journal |
| issn | 2029-4913 2029-4921 |
| language | English |
| last_indexed | 2024-12-13T08:23:41Z |
| publishDate | 2022-01-01 |
| publisher | Vilnius Gediminas Technical University |
| record_format | Article |
| series | Technological and Economic Development of Economy |
| spelling | doaj.art-481803c7fa974e1a99d45f6f76d280892022-12-21T23:53:55ZengVilnius Gediminas Technical UniversityTechnological and Economic Development of Economy2029-49132029-49212022-01-01281131–162131–16210.3846/tede.2021.1570415704Partial backordering inventory model with limited storage capacity under order-size dependent trade creditWen-Hui Jiang0Ling Xu1Zhen-Song Chen2Witold Pedrycz3Kwai-Sang Chin4School of Transportation and Logistics, Southwest Jiaotong University, Chengdu, 610031 Sichuan, ChinaSchool of Transportation and Logistics, Southwest Jiaotong University, Chengdu, 610031 Sichuan, ChinaDepartment of Engineering Management, School of Civil Engineering, Wuhan University, 430072 Wuha, ChinaDepartment of Electrical & Computer Engineering, University of Alberta, Edmonton AB, CanadaDepartment of Systems Engineering and Engineering Management, City University of Hong Kong, 83 Tat Chee Avenue, Kowloon Tong, Hong Kong, ChinaThis 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 2021https://journals.vgtu.lt/index.php/TEDE/article/view/15704inventoryorder-size dependent trade creditlimited storage capacitypartial backordering |
| spellingShingle | 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 Technological and Economic Development of Economy inventory order-size dependent trade credit limited storage capacity partial backordering |
| title | 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_short | 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 |
| topic | inventory order-size dependent trade credit limited storage capacity partial backordering |
| url | https://journals.vgtu.lt/index.php/TEDE/article/view/15704 |
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