Abstract
In this paper, a production-inventory model is presented which unifies the inventory problem of the finished product and decaying raw materials for a single product production system. The decay of the raw materials is assumed to be a constant fraction of the on-hand inventory. The product is produced in batches and the raw materials are obtained from outside suppliers. The objective is to minimize the total annual cost of operating the system. It is shown that the total annual cost is a convex function of the production cycle length. When there is no decay, the model developed is related to the corresponding model for non-decaying items. An example is given to illustrate the derived results.
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