Optimal replenishment policy for items with three-parameter Weibull deterioration, stock-level dependent demand and partial backlogging

• Main Authors: Sanni Smaila S., Chigbu Polycarp E.
• Format: Article
• Language: English
• Published: University of Belgrade 2018-01-01
• Series: Yugoslav Journal of Operations Research
• Subjects: inventory model; stock-dependent demand; differential equation; optimal policy; hazard function
• Online Access: http://www.doiserbia.nb.rs/img/doi/0354-0243/2018/0354-02431600019S.pdf

Our focus in this paper is on determining an optimal replenishment policy for items with three-parameter Weibull distribution deterioration and inventory-level dependent demand. We developed and analyzed the model under the assumption of partial backlogging. The three-parameter Weibull hazard rate captures the impact of already deteriorated items that are received into the inventory, as well as those items that may start deteriorating in future. The inventory-level demand reflects a real market demand for product whose sales is enhanced by stock on display. We study a case base examples to gain some quantitative insight into the proposed model and we perform sensitivity analysis to draw some managerial implications.