Article ID: | iaor200966 |
Country: | Netherlands |
Volume: | 178 |
Issue: | 3 |
Start Page Number: | 789 |
End Page Number: | 807 |
Publication Date: | May 2007 |
Journal: | European Journal of Operational Research |
Authors: | Ouyang Liang-Yuh, Dye Chung-Yuan, Hsieh Tsu-Pang |
Keywords: | deteriorating items |
In this paper, a deterministic inventory model for deteriorating items with two warehouses is developed. A rented warehouse is used when the ordering quantity exceeds the limited capacity of the owned warehouse, and it is assumed that deterioration rates of items in the two warehouses may be different. In addition, we allow for shortages in the owned warehouse and assume that the backlogging demand rate is dependent on the duration of the stockout. We obtain the condition when to rent the warehouse and provide simple solution procedures for finding the maximum total profit per unit time.