An EPQ model for deteriorating items with price sensitive demand and shortages

In the classical inventory models, the demand rate is regularly assumed to be either constant or time‐dependent, but independent of the stock levels. Since the demand rate is not only influenced by stock level, but also is associated with the selling price. Therefore, we also take into account the selling price and then establish an EPQ model, in which the demand rate is a function of the selling price. In this paper, we consider the production rate as demand dependent, which is more realistic in our general life. The planning horizon is infinite. The time dependent rate of deterioration is taken into consideration and demand rate is price dependent. We consider that shortages are allowed and partially backlogged.