Research On Inventory Models Of Deteriorating Items With Inventory-Level-Dependent Deterioration Effect

A great deal of research has been made on deteriorating items since 1990 s.Many research achievements have been accumulated with respect to deteriorating items.The rapid development of technology and the renewal of economic environment hasten the innovation of research problems,and it is essential to update the research theories and explore new research significance.The high profit margin of deteriorating items in retail industry has accelerated the new development of retail business.Various problems based on different backgrounds would naturally derive the diverse management conclusions.The inherent difference between theory and practice has generated many research gaps for studies.Many conventional conclusions of deteriorating items in operations management might not be appropriate for today's marketing.New business model has changed the traditional concept in marketing,therefore new theories and models are necessary to be developed based on the whole new practice problems,which further promotes the development of deteriorating items research and enriches the research scope for deteriorating items.It is initiated that the basic property of deteriorating items enlightens us to reform the traditional model under the frame of OM and marketing.In addition,new research method and perspective have been introduced to discuss the inventory management for deteriorating items.This work emphasizes on advertising effort and maximized profit for deteriorating items,and the mainly research contents,research methods and research innovations are demonstrated as follow.(1)We have studied the joint ethylene effect and adverting effort on deteriorating items for inventory management.It is assumed that the quantity of deteriorating items could influence the deteriorating rate for themselves,which is the core concept of our research and inverse inventory-dependent demand model has been constructed.The research method is mainly control theory and two dimensional differential equations are modelled to make theoretical research and analysis on inventory management on deteriorating items.We present the existence of necessary conditions for the optimal solutions,and it is focused on the inventory model under the given planning horizon.It is assumed that the demand has connection with retail price,goodwill and inventory level,and the disposal of last item has also been explained in the model.The theoretical part concentrates on the existence of necessary conditions for optimal advertising conclusions and the concavity and convexity of the optimal solutions are also been mentioned.The formulas of optimal goodwill and inventory change are also given.Owing to the complexity of model conclusions,matrix expressions for some conclusions are presented to describe the expression form of maximum profit.(2)The single advertising effort research for deteriorating items is not enough to enrich our research model,because it is short of the perspective of the whole system.Pricing problem is always the research hotspot in inventory management,and dynamic pricing is the next research topic in our work.We have illustrated the customers' traffic of retail store to explain the internet channel is a true competitive factor to retail store.The compatibility index is introduced to illustrate this phenomenon of items in the demand model,and the demand is also influenced by goodwill and price.The model has not taken ordering and backlogging into consideration,and mainly analyzes advertising problem on inventory management.It is first assumed that the retail price is fixed and to search the optimal advertising effort,with control theory to explain the conclusions.Moreover,we consider the case that the retail price is dynamic and we derive the optimal advertising and goodwill with the same method.Numerical analysis is taken to present tables and figures to show the theoretical solutions.Static strategy and dynamic strategy are compared to derive some interesting results.Sensitive analysis is introduced to study the key parameters and it is shown that static strategy is better than dynamic strategy in profit performance.Managers could refer to the analysis conclusions to make flexible policies according to the real marketing situation.Furthermore,the rate of capital turnover is mentioned to demonstrate the efficiency of profit,which enrich and perfect the previous research problems.Some innovative research conclusions would be obtained under the new research method.(3)Inventory management model under two echelon supply chain is established to study the deteriorating items.It is assumed that several ordering cycles are introduced and make to order mode is considered from the perspective of supply chain.Learning effect is integrated into our research work to explore the inventory management model.The research is also focused on ethylene effect,and due to the complicated form of model analysis,some major points have put on the derivation and analysis for model.Given the research background,learning effect and ethylene effect are combined to discuss the system profit,and the objective of model is to ensure the maximum of optimal profit.The innovation is shown in the aspect of ordering numbers and ethylene effect,and some new conclusions and management suggestions are derived.In the solving part for model,the necessary conditions for the maximum profit are presented.(4)The innovation is reflected in the method of control theory on research of deteriorating items,which integrates the operations management and engineering discipline.It is first to discuss the quantity problems on deteriorating rate from a microcosmic perspective,and it is proved that it is closer to the reality.Moreover,there are few studies on dynamic advertising for deteriorating items in the OM field.The two dimension differential equation is adopted to study the inventory management for deteriorating items has innovation.We have analyzed the single retailer and two echelon supply chain,respectively,and dynamic deteriorating rate is the core in our research,with the method of control theory and differential model.Altogether,our work has developed and extended the research category based on the concept of dynamic deteriorating rate,which completes the current theory and enriches the research contents for inventory management of deteriorating items.This research has developed the traditional works on deteriorating items,and promotes the interface study in OM field,which could provide more practical suggestions for managers from a scientific aspect.