A note on a lot sizing heuristic for deteriorating items with time-varying demands and shortages

Abstract

In the present article, an existing heuristic procedure is applied to an inventory of deteriorating items with (i) linearly and (ii) exponentially time-varying demands and shortages over a fixed planning horizon. In a similar problem, Hariga and Al-Alyan [Hariga M, Al-Alyan A. A lot sizing heuristic for deteriorating items with shortages in growing and declining markets. Computers & Operations Research 1997;24:1075–83] allowed shortages in all cycles except in the last one ( policy-B). Here shortages are considered in each cycle and are completely backlogged ( policy-A). The successive scheduling periods over an infinite time horizon are adjusted for a finite planning horizon following different adjustment policies (APs) that are proposed in an algorithmic form. Numerical examples are taken from Hariga and Al-Alyan [20] to show that the replenishment policy-A results in a lower average system cost than that of policy-B in both types of demand patterns. It is also found that the approximate results under the policy-A are closely associated with those of the optimal ones. Scope and purpose The purpose of the article is to implement an existing heuristic procedure to an inventory system of deteriorating items allowing shortages in all cycles over a finite planning horizon under linearly and exponentially time-varying demand patterns. Allowing shortages in all cycles is a significant departure from the traditional practice of allowing shortages in all cycles except the last one. With this departure, we reconsider the problem of Hariga and Al-Alyan [20] published recently in the Journal of Computers & Operations Research and find a reduction in the system cost upto 15%. The scope of applications of the heuristic is widely open for newly developed high technology products (e.g., microcomputer chips, sophisticated instruments, etc.) which have growing market demands or in the case of technologically obsolete products (e.g., spare parts of obsolete machines, etc.) having a gradually declining market demands.