Optimal Replenishment policy for Items with Three-parameter Weibull distribution Deterioration, Stock-level dependent Demand and partial backlogging

Abstract

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.

Keywords: Inventory Model, Stock-Dependent Demand, Dierential Equation, Optimal Policy, Hazard function.