A multi-stage model to study inventory management of raw materials with shortages (Q2073510)

Summary: The research on raw material procurement and maintenance in bio-ethanol production together with its socio-economic impact has been done. Most of the studies focus on sustainable utilisation and procurement policies of raw materials which includes transportations and maintenance of raw material inventory. In this present work we propose an interconnected multistage framework to minimise the cost involved in four stages of raw material procurement such as, purchase and transportation, primary storage without preservation, cleaning room and final storage with preservation. Further we establish that maintenance cost can be minimised by regulating the quantity of raw materials flowing from primary storage to final storage. We provide an algorithm to formulate a linear programming problem to optimise the cost involved in both purchase and transportation together. We perform sensitivity analysis to test flexibility of the model and represent the result graphically.