Imperfect Inventory Model for Trended Demand Under Radio Frequency Identification and Trade Credit


Nita H. Shah, Monika K. Naik




In this paper, models on concepts of radio frequency identification adoption (RFID), imperfect products reworking system, and trade credit for deteriorating inventory with / without utilizing the preservation investment technology are derived, which makes this article, a unique one. Estimation of optimal values of RIFD levels of investment for ordering, operating, just in time efficiencies along with production cycle time, and preservation investment are carried out. The rate of market demand is quadratic in nature based on time and is suitable for the items for which demand rises primarily, and then after it begins to decline. This form of demand is applicable to a vast range of items like garments, fashion accessories, electronics, etc.. The model is further divided into two cases based on demand rate and products reworking of imperfect quality items. Further, in each case, four subcases based on credit period and time of production cycle are analysed. The main objective of the inventory problem is to calculate total manufacturing cost in each subcase. The classical optimization technique is utilized for calculating the optimal values of decision variables. For the validation of developed models in each case, numerical examples are demonstrated, then using the concept of eigen-values of a Hessian matrix, we have proved the convex nature of the systems total cost for the case which has the minimum total cost. Also the decision variable sensitivity analysis is done by altering the inventory parameters for generating fruitful managerial insights. The model derived in this article can be applied in supply chain management of packaged food products/seasonal food products/milk products like butter, cheese, etc., where the tags for RFID are applied to track eatable/milk items of during delivery and storing. Also, if the model deals with a product of improper production, then it undergoes the reworking process.