A deterministic lot-size inventory model for deteriorating items with shortages and a declining market

This paper considers a replenishment policy of deteriorating product where demand declines exponentially over a fixed time horizon. Deterioration is assumed to be a constant fraction of the total on-hand inventory and complete backordering of demand is assumed. An extension of the model for partial backordering is illustrated. Numerical results for complete backordering are provided and a comparison of policies is made. It is indicated that when shortage is allowed, the model leads to lower average total cost.