Consignment stock policy in an integrated vendor-buyer model for deteriorating item with stock dependent demand under buyer’s space limitation

¹ Department of Applied Sciences, Haldia Institute of Technology, East Midnapore 721657, India
² Department of Mathematics, Kanchrapara College, North 24 Parganas 743145, India
³ Department of Mathematics, Jadavpur University, Kolkata 700032, India

^* Corresponding author: sudarshan.bardhan@gmail.com

Received: 28 May 2020
Accepted: 23 October 2020

Abstract

In this paper, a single-vendor single-buyer integrated inventory model for a deteriorating item with consignment stock policy is developed, assuming that the market demand is stock dependent and there is space limitation on the buyer’s storage capacity. Both equal and unequal shipments from the vendor to the buyer are considered. The effects of the buyer’s space capacity on the average cost, shipment size, and production batch are studied through numerical example. It is deduced that production rate is the key factor to determine whether to use equal or unequal shipment strategy. Sensitivity analysis is carried out to establish the robustness of the solutions of the models developed.