Optimizing Inventory Management for Non-Instantaneously Deteriorating Items: The Synergistic Role of Preservation Technology and Greening Investments

Abstract

In today's competitive business landscape, sustainable practices are becoming crucial for long-term success. Organizations implementing eco-friendly measures optimize resource use through greening investments. Businesses embrace green strategies to not only enhance product marketing but also to build customer loyalty and improve their corporate reputation. Moreover, many environmentally conscious companies address product deterioration by investing in preservation technology. This paper develops an inventory model for non-instantaneously deteriorating items, exploring the combined impact of preservation technology and greening investments on inventory management. The study examines how customer demand, influenced by both price and greenness levels, affects inventory decisions under partially backlogged shortages. Theoretical results are formulated to identify optimal pricing, replenishment cycles, and preservation technology investment costs across different greenness levels. A unique aspect of this research is the use of a power function for the preservation technology investment in the numerical example. Sensitivity analysis is conducted to evaluate the model's robustness and provide practical managerial insights.