Abstract

This work presents an extension of the classical EOQ model for items with a fixed shelf life and a declining demand rate due to a reduction in the quality of the item in the course of its shelf-life. The demand rate, reflecting consumer preference for fresh items, is a polynomial function of the remaining time until the expiry date of the item. A mathematical model is developed to maximize the average profit per unit time, subject to shelf-life and marginal profit limitations. We prove that based on these limitations the model has a unique optimal solution and suggest a procedure for finding the optimal cycle length. A numeric example, including a sensitivity analysis, illustrates the model.

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