Optimal and heuristic inventory replenishment models for deteriorating items with exponential time-varying demand

Optimal and heuristic inventory replenishment models for deteriorating items with exponential time-varying demand

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Article ID: iaor1998621
Country: Netherlands
Volume: 79
Issue: 1
Start Page Number: 123
End Page Number: 137
Publication Date: Nov 1994
Journal: European Journal of Operational Research
Authors: ,
Keywords: deteriorating items
Abstract:

In this paper we present optimal and heuristic procedures for the inventory replenishment problem in which items are deteriorating at a constant rate. The demand rates are changing exponentially with time over a known and finite planning horizon. We have developed an iterative numerical procedure to find the optimal replenishment schedule. The first two heuristics are based on the economic order interval approximation. The third heuristic restricts all the replenishment cycles over the planning horizon to be equal over the planning horizon. The last three heuristics are extended versions of the Silver–Meal heuristic, the least cost approach, and the least-unit cost heuristic which were used in the inventory literature for the case of discrete time-varying demand without deterioration. We further assess the cost and computation time effectiveness of the six heuristics. The results of a sample of 1440 problems show that the extended least cost approach is the most cost effective.

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