Published Paper Details:

This paper presents an inventory model for a single item where the demand rate is stock-dependent. Three fixed costs are considered in the model is purchasing cost, ordering cost and holding cost. A new approach focused on maximizing the return on investment (ROI) is used to determine the optimal policy. It is proved that maximizing profitability is equivalent to minimizing the average inventory cost per item. The optimal policy for minimizing the inventory cost per unit time is also obtained with a zero-order point, but the optimal lot size is different. Both solutions are not equal to the one that provides the maximum profit per unit time. The optimal lot size for the maximum ROI policy does not change if the purchasing cost or the selling price vary. A sensitivity analysis for the optimal values regarding the initial parameters is performed by using partial derivatives. Some useful managerial insights are deduced for decision-makers. Numerical examples are solved to illustrate the obtained results on the Inventory Model with Stock-Dependent Demand Rate and Maximization of the Return on Investment in fuzzy environment.