A SIMPLE SOLUTION METHOD FOR THE FINITE HORIZON EOQ MODEL FOR DETERIORATING ITEMS WITH COST CHANGES

Abstract

In this article, we generalize Lev and Weiss's (1990) finite horizon economic order quantity (EOQ) model with cost change to the inventory system with deterioration. Supplier announces some or all of cost parameters may change after a decided time. Depending on whether the inventory is depleted at the time of the last opportunity to purchase before some or all of the cost parameters may change, there are two types of inventory models to be discussed. The main objective of this paper is to identify the optimal ordering policy of the inventory system by comparing the minimum cost of the two types of models. We suggest a finite horizon EOQ model to combine the above two types and propose a theorem that can quickly identify the optimal policy of the suggested model. In considering temporary price discount problem and discrete-time EOQ problem, in general, there are integer operators in mathematical models, but our approach offers a closed-form solution to these kinds of problems. Numerical examples are presented to demonstrate the results of the proposed properties and theorem.