A new variable production scheduling strategy for deteriorating items with time-varying demand and partial lost sale

Recently, Wee and Wang modeled a production–inventory system for deteriorating items with time-varying demands and completely backlogged shortages; we now present an extended cost model that relaxes the assumption of completely backlogged shortages by permitting part of the backlogged shortages to turn into lost sales – which is assumed to be a function of currently backlogged amount. Wee and Wang constructed production schedules for this system using the traditional scheduling strategy in which each cycle starts with replenishment and ends with shortages. We now consider an alternative scheduling strategy in which each cycle of a schedule starts with a period of shortages, then followed by continuous replenishment. By examining the profit performance of the two scheduling strategies (i.e., “start with replenishment” versus “start with shortages”), we show that our alternative strategy produces schedules with superior cost and profit values.