A Two Warehouse Inventory Model for Deteriorating Items with Shortages under Genetic Algorithm and PSO

Abstract The purpose of this article is to evaluate the value of integrating warehouse and inventory decision. Therefore in this paper a two warehouse inventory model for deteriorating items is considered under assumption that the Inventory cost (including holding cost and deterioration cost) in RW (Rented Warehouse) is higher than those in OW (Owned Warehouse) due to better preservation facilities in RW. The demand and holding cost, both are taken as a variable. Shortages are allowed in the OW fully backlogged at the next replenishment cycle .This paper mainly dealt with deteriorating items with linear demand and variable holding cost which is constant for a definite time period and after that it increases linearly according to a function of ordering cycle length in RW and remains constant in OW. Transportation cost is incurred and is function of distance irrespective of number of items and the capacity of vehicle. Four kinds of meta-heuristic algorithms or meta-heuristic hybrid algorithms: harmony search, particle swarm optimization, genetic algorithms, simulated annealing. Computational results showed that HS, hybrid of HS and hybrid method of HS performed the best, based on objective function values respect to other kind of the algorithms. Other applications of HS in inventory and supply chain managements can be extended to consider pricing problems. A numerical example is presented to illustrate and validate the model and sensitivity analysis is carried out in case-1for different values of a parameter keeping rest unchanged.