Article ID: | iaor20118046 |
Volume: | 5 |
Issue: | 3 |
Start Page Number: | 515 |
End Page Number: | 530 |
Publication Date: | Aug 2011 |
Journal: | Optimization Letters |
Authors: | Uthayakumar R, Valliathal M |
Keywords: | backorders, economic order model, inflation |
This paper discusses the production inventory model over an infinite time horizon. Here we consider demand as a function of stock and time. Deterioration is a function of time and time‐varying production. Our objective is to minimize the total cost which is a function of set up cost, holding cost, shortage cost, and opportunity cost due to lost sales. The traditional costs such as purchasing cost, shortage cost and opportunity cost due to lost sales are kept constant. We consider holding cost to be a non‐linear function of time. Shortages are allowed and are partially backlogged. Here, time durations are the decision variables. Numerical examples are given to illustrate the model.