An inventory model for ameliorating and deteriorating items taking account of time value of money and finite planning horizon

An inventory model for ameliorating and deteriorating items taking account of time value of money and finite planning horizon

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Article ID: iaor200973298
Volume: 39
Issue: 8
Start Page Number: 801
End Page Number: 807
Publication Date: Aug 2008
Journal: International Journal of Systems Science
Authors: , , ,
Keywords: deteriorating items
Abstract:

The objective of this study is to develop an optimal replenishment inventory strategy to consider both ameliorating and deteriorating effects taking account of time value of money and finite planning horizon. The amelioration rate and the deterioration rate are assumed to follow a Weibull distribution. The inventory system is particularly useful for young livestock whose utility increase over time. The discounted cash flow and optimisation technique are used to derive an optimal solution. A numerical example and sensitivity analysis are given to illustrate the theory of the inventory system.

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