Inventory Model for Non-instantaneous Decay Items with Price-Driven Demand: Integrating Inflation, Sustainability Investments, Shortages, and Hybrid Payments

This study addresses the growing concern of global warming by proposing a sustainable two-warehouse inventory model for non-instantaneously deteriorating items under inflationary conditions. The model integrates price-dependent demand, carbon emission control, preservation technology investment, and a hybrid payment scheme within a green supplier-retailer-consumer supply chain. Energy-efficient green equipment is incorporated to minimize carbon emissions during product transit between warehouses and to consumers. The model also considers product freshness, allowing for partial shortages while optimizing inventory management and profitability. A mathematical formulation is developed, along with a solution algorithm to optimize key decision variables, such as order quantity, pricing strategies, and preservation investments. Numerical examples demonstrate the model’s practicality, while a sensitivity analysis confirms its robustness across various scenarios. The results show that strategic investment in preservation and green technologies significantly lowers environmental impact while improving inventory control and profitability.