Economic order quantity model on inflationary conditions with demand influenced by innovation diffusion criterion

Abstract

In this paper, an inventory model has been proposed based on the explicit assumptions of interaction of marketing parameters to the optimal inventory replenishment policy. This study applies the discounted cash flow (DCF) approach for the analysis of the replenishment problem over a finite planning horizon. The demand rate is a function of time and is assumed to be driven by innovation diffusion process. In addition, a numerical example is performed justifying the need of incorporating the effect of innovation along with the effect of inflation on the optimal inventory replenishment. Sensitivity analysis is also performed to discuss the effectiveness of the proposed framework.