P-Model of Inventory Optimization for high technology multi-generation products under limited warehouse storage space

Abstract

This research work puts forward the inventory optimization model for the high technology multi-generation products under the situation of limited warehouse storage space. It is assumed that the manufacturer has an own space which has a lesser opportunity cost of usage as compared to another rented space, that carries higher charges on per unit area basis. Therefore, the manufacturer utilizes the own storage space for the period of time where his own space is sufficient to keep the inventories. When its inhouse space is not sufficient to store all the inventories, it stores the excess inventories at the rented space. While the research work has been done on various demand patterns under such a scenario, there is no research present on the inventory optimization under storage space constraints for the generations of innovative products whose demand follow the Norton Bass Model of Innovation Diffusion. This paper lays down a model for inventory optimization, but also puts forward a few theorems on the dynamics of how the model behaves with the change in innovation effect, imitation effect, with the rent of the leased location and with the storage capacity of own location. Finally, the paper performs numerical illustrations to show the behavior of the proposed model.