A Marketing Decision Oriented Two Warehouses Inventory System Under Displayed Stock Level Dependent Demand Rate

The aim of this work is to introduce a two storage inventory problem due to space constraint of own warehouse (OW). In the present competitive situation, due to the relatively small size of an existing warehouse in the popular place (like, shopping mall, supermarket, etc.), retailers/departmental store need an additional warehouse RW in order to reduce the potential loss for the retail business. The rate of replenishment is infinite and the demand is dependent on displayed stock level (DSL) in the own warehouse along with the price and advertisement of the product. In addition, we have studied both \(L_{1}\) and \(L_{2}\) —systems separately (the system with single and two warehouses facilities are referred to \(L_{1}\) —system and \(L_{2}\) —system respectively). Based on the storage capacities of OW and RW, and different demand parameters, all possible cases of both \(L_{1}\) and \(L_{2}\) —systems have been discussed. For finding the optimal solution, an algorithm has been proposed. Finally, we have validated the proposed model by using one numerical example and performed sensitivity analysis by changing different system parameters.