Article ID: | iaor20063042 |
Country: | Netherlands |
Volume: | 168 |
Issue: | 2 |
Start Page Number: | 463 |
End Page Number: | 474 |
Publication Date: | Jan 2006 |
Journal: | European Journal of Operational Research |
Authors: | Hou Kuo-Lung |
Keywords: | deteriorating items |
This paper derives an inventory model for deteriorating items with stock-dependent consumption rate and shortages under inflation and time discounting over a finite planning horizon. We show that the total cost function is convex. With the convexity, a simple solution algorithm is presented to determine the optimal order quantity and the optimal interval of the total cost function. The results are discussed with a numerical example and particular cases of the model are discussed in brief. A sensitivity analysis of the optimal solution with respect to the parameters of the system is carried out.