An EOQ model for deteriorating items with linear time-dependent demand rate and shortages under inflation and time discounting

An EOQ model for deteriorating items with linear time-dependent demand rate and shortages under inflation and time discounting

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Article ID: iaor1996416
Country: United Kingdom
Volume: 46
Issue: 6
Start Page Number: 771
End Page Number: 782
Publication Date: Jun 1995
Journal: Journal of the Operational Research Society
Authors: , ,
Abstract:

An economic order quantity (EOQ) inventory model for deteriorating goods is developed with a linear, positive trend in demand allowing inventory shortages and backlogging. The effects of inflation and the time-value of money are incorporated into the model, considering two separate inflation rates: namely, the internal (company) inflation rate and the external (general economy) inflation rate. It is assumed that the goods in the inventory deteriorate over time at a constant rate θ. The inventory policy is discussed over a finite time-horizon with several reorder points. The results are discussed with a numerical example and a sensitivity analysis of the optimal solution with respect to the parameters of the system is carried out. Several particular cases of the model are discussed in brief.

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