An inventory model of two-warehouse system with variable demand dependent on instantaneous displayed stock and marketing decisions via hybrid RCGA

In this paper, a single item deterministic inventory model with two separate warehouses called owned warehouse/show-room (OW) and rented warehouse (RW) is developed. The proposed model of this paper also considers a realistic assumption regarding the storage capacity of the rented warehouse. Demand is a function of selling price, advertisement of an item and displayed inventory level in OW. The stocks of RW are shipped to OW under bulk release pattern where shortages are not allowed. We discuss different scenarios of the proposed model to address relative size of stock dependency parameters and the capacity of owned warehouse. For each scenario, the corresponding problem is formulated as a constrained mixed integer nonlinear programming problem with three integer and two non-integer variables and a real coded genetic algorithm (RCGA) is developed to solve the resulted problem. The proposed model of the paper is also examined using some numerical examples and sensitivity analysis is performed.