Optimising deteriorating inventory with lead time and quadratic selling price-sensitive demand in dual-level storage facilities

Research on EOQ models traditionally assumes constant demand and deterioration rates, which often diverge from real-world conditions. The developed model focuses on a single deteriorating product managed with a dual-storage system. Market demand varies parabolically over time, influenced by product selling price. When orders exceed the firm's warehouse capacity, a dual-warehouse system is employed, with excess inventory stored in rented facilities. Initially, the firm operates primarily from its own warehouse, with overflow directed to rented space. Over time, inventory in the rented warehouse decreases due to demand and deterioration, mirroring declines in overall stock levels. The model permits backlogged shortages during lead times. A numerical example validates the model, augmented by sensitivity analyses exploring how varying inventory parameters impact decision variables. This framework aims to enhance inventory management strategies by aligning them closer to practical operational realities.