A deterministic model for perishable inventory with variable demand under demand dependent production rate, inflation, and customer returns

Abstract

Due to highly competitive market conditions and globalisation, the manufacturer and the retailer are both struggling a lot to entice each potential consumer and convert them into paying consumers. The purpose of this article is to explore a production inventory model for non-instantaneous perishable goods with price, stock, and advertisement-dependent demand under inflationary conditions. In addition to other factors, such as the holding expense is presumed to be a linear function of time and the concept of customer returns has been included as a function of both demand and sales price. The main objective of this research is to determine the cycle time, price, and frequency of advertisement to maximise the present value of the manufacturer's overall profit. Additionally, an algorithmic rule and propositions are formed to check the optimality of the total profit function and a numerical example is discussed to illustrate the results. Finally, the sensitivity analysis of major parameters is analysed and for decision-maker/manufacturers, numerous supportive managerial insights are also discussed.