An economic order quantity model for deteriorating items with time-dependent deterioration rate, demand rate, unit production cost and shortages

Abstract

An order level inventory model is developed for a deteriorating item with a linear trend in demand. It is assumed that the finite production rate is proportional to the time-dependent demand rate and the deterioration rate is time proportional. The unit production cost is taken to be inversely related to the demand rate. The model is first solved allowing no shortage in inventory. The case of inventory shortage is discussed next. The results are illustrated with the help of numerical examples. The sensitivity of the solution to changes in the values of the parameters associated with the model is discussed.