An inventory model for deteriorating items with stock-dependent consumption rate and shortages under inflation and time discounting

An inventory model for deteriorating items with stock-dependent consumption rate and shortages under inflation and time discounting

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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:
Keywords: deteriorating items
Abstract:

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.

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