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: | Wee Hui-Ming, Law Sh-Tyan |
Keywords: | inventory |
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.