A backorder inventory model considering price-sensitive and stock-dependent demand Online publication date: Thu, 18-Apr-2024
by Dharma Lesmono; Taufik Limansyah; Ignatius A. Sandy
International Journal of Mathematics in Operational Research (IJMOR), Vol. 27, No. 3, 2024
Abstract: In the inventory management system, time and quantity are crucial factors to be considered in relation to inventory costs. Demand is another external factor that influences the availability of goods for customers. In fact, demand varies from time to time, being dependent on price, time, stock or other relevant factors. The dynamics of this condition can be described by developing a mathematical model. In this paper, we develop a backorder inventory model considering price-sensitive and stock-dependent demand. From the model, we determine the cycle length and the time when the inventory drops to zero as decision variables in order to minimise the total inventory cost. Based on the sensitivity analysis, we found that generally speaking, changes in certain parameter values will substantial affect the decision variables of the model. Having this information at their disposal, retailers can determine which specific parameters should be managed in order to minimise the total inventory cost.
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