Economic production lot size for deteriorating items taking account of the time-value of money

Economic production lot size for deteriorating items taking account of the time-value of money

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Article ID: iaor20001414
Country: United Kingdom
Volume: 26
Issue: 6
Start Page Number: 545
End Page Number: 558
Publication Date: May 1999
Journal: Computers and Operations Research
Authors: ,
Keywords: inventory
Abstract:

This study applies the discounted cash-flow approach to a deterministic inventory model of an item that deteriorates over time at a varying rate. An optimization framework is presented to derive optimal production and pricing policies to maximize the net present value of profits over a finite planning horizon. A numerical example is provided to illustrate the optimization procedure.

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