Retail-Chain Multi-Item Optimization : A Mixed Integer Non-Linear (MINL) Heuristic Approach

Abstract

The model studies the optimization of mixed integer non-linear retail-chain multi-item model. In this model publicity and no items lost due to deterioration are the significant factors with the decision parameters are retailer’s order quantity publicity effort factor for multi-item and cycle time. Retailer’s order quantity for deteriorated multi-item is an integer and the publicity effort for each multi-item may be integer or fraction. So a heuristic approach is applied in a mixed integer nonlinear retail-chain multi-item model. The market demand may increase with the publicity of the multi-item over time when the units do not lost due to deterioration. In this model, publicity effort and replenishment decision are adjusted arbitrarily upward or downward for profit maximization model in response to the change in market demand within the planning horizon. The numerical analysis and comparative analysis show that an appropriate publicity policy can benefit the retailer. Finally, sensitivity analysis of the optimal solution with respect to the major inventory parameters is also studied to draw the managerial implications with retailer’s perspective.