Two-warehouse inventory model for deteriorating items when demand is price sensitive

The main objective of this article is to develop a two-warehouse inventory model for deteriorating items when demand is price sensitive. It is assumed that the units are transported under a bulk release pattern from Rented Warehouse to Own Warehouse and the deterioration rates of the items are different in the two warehouses. Further, the model jointly optimises the order quantity and selling price. Depending upon the optimal order quantity, decision is made whether to rent other warehouse. The optimal shipment policy is also provided if indeed the other warehouse is needed. The results have been validated with the help of a numerical example. Sensitivity analysis on the demand parameters is also performed.