INVENTORY MODEL WITH ADVERTISEMENT-DEPENDENT DEMAND
DOI:
https://doi.org/10.53555/2r6bqj32Keywords:
Inventory system, Advertisement-dependent demand, Differential equation, Optimal cycle time, Cost minimizationAbstract
In the present study we develop an inventory model in which demand is influenced by advertisement activities. The advertisement effect is represented by a power function of advertisement cost and its frequency. Demand is assumed to be both inventory-dependent and advertisement-dependent. The system is formulated using a first-order linear differential equation and solved analytically under appropriate boundary conditions. The optimal inventory cycle length is derived by minimizing the average total cost function. Numerical illustrations and sensitivity analysis are presented to demonstrate the applicability of the proposed model. The results indicate that advertisement plays a significant role in accelerating demand and reducing inventory cycle time, although excessive advertisement may increase the total cost. The model provides valuable managerial insights for designing effective inventory and advertisement policies.
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