A heuristic for replenishment of deteriorating items with time-varying demand and shortages in all cycles

The inventory replenishment problem for an item deteriorating at a constant rate, and having a linear (positive) trend in demand and a finite shortage cost, is considered. A heuristic model is developed to determine the optimal reorder times when a fixed planning horizon does not exist. The model is then used in a situation with a prescribed planning horizon, allowing shortages in all replenishment cycles. The solution procedure is illustrated with the help of a numerical example. Sensitivity analysis of the parameter values is also carried out.