An optimal ordering policy for a stochastic inventory model for deteriorating items with time-dependent selling price

This paper studies a stochastic inventory model for deteriorating items where the selling price is assumed to be a decreasing function of time. The rate of deterioration of the items are assumed to be constant over time. The selling price decreases monotonically at a constant rate with the deterioration of the items also. The demand and the lead-time both are random. A profit-maximization model has been formulated and solved here for optimum order quantity. Numerical examples are provided to illustrate the model and the results, and sensitivity analyses have been performed to examine how sensitive the solution is to the system parameter values, lead-time distributions, and the form of selling price function.