Stock Dependent Demand

Abstract—This paper deals with a two warehouse inventory system under the effect of stock, price and deterioration on demand. Items stored in rented warehouse RW and owned warehouse OW, deteriorates with two different rates. A fraction of discount on the selling price is offered to enhance the demand and to reduce the loss due to deterioration in owned warehouse. The objective of this study is to determine the optimal discount policy and to deduce the optimal order quantity to maximize the profit of the system. Numerical examples have been illustrated to explore the solution of the proposed model