Re-examining optimal ordering policies in a two-warehouse EOQ model with deteriorating items

Abstract This paper revisits the fundamental two-warehouse Economic Order Quantity model for exponentially deteriorating items. Traditionally, these models assume that utilizing a rented warehouse is never beneficial when space is available in an owned warehouse. It is demonstrated that this assumption does not universally hold true, which significantly impacts the validity of existing literature. We identify sufficient conditions under which this traditional premise remains valid. To support our findings, the paper presents numerical examples that illustrate various inventory and cost scenarios. Additionally, we highlight key managerial implications, offering guidance for inventory managers. Finally, we propose several promising avenues for future research.