An inventory model for deteriorating items with exponentially increasing demand and shortages under inflation and time discounting

A lot-size inventory model for deteriorating items is derived with exponentially increasing demand by allowing complete backlogging. The effects of inflation and time value of money are studied on the model. It is assumed that the units in inventory deteriorate over time at a constant rate. The inventory policy is discussed over a finite planning horizon with several reorder points. Sensitivity analysis of the optimal solution with respect to the parameters of the system is carried out with the help of a numerical example.