Article ID: | iaor19982085 |
Country: | Netherlands |
Volume: | 53 |
Issue: | 2 |
Start Page Number: | 171 |
End Page Number: | 180 |
Publication Date: | Nov 1997 |
Journal: | International Journal of Production Economics |
Authors: | Chaudhuri K.S., Ray J. |
Keywords: | economic order |
This paper develops a finite time-horizon deterministic economic order quantity inventory model with shortages, where the demand rate at any instant depends on the on-hand inventory (stock level) at that instant. The effects of inflation and the time value of money are taken into account, considering two separate inflation rates: namely, the internal (company) inflation rate and the external (general economy) inflation rate. The results are discussed with a numerical example and a particular case of the model is discussed in brief. A sensitivity analysis of the optimal solution with respect to the parameters of the system is carried out.