Abstract
The article deals with an economic order quantity (EOQ) inventory model for deteriorating items in which the supplier provides the purchaser a permissible delay in payment. This is so when deterioration of units in the inventory is subject to constant deterioration rate, demand rate is quadratic function of time and salvage value is associated with the deteriorated units. Shortages in the system are not allowed to occur. A mathematical formulation is developed when the supplier offers a permissible delay period to the customers under two circumstances: 1) when delay period is less than the cycle of time; and 2) when delay period is greater than the cycle of time. The method is suitable for the items like state-of-the-art aircrafts, super computers, laptops, android mobiles, seasonal items and machines and their spare parts. A solution procedure algorithm is given for finding the optimal order quantity which minimizes the total cost of an inventory system. The article includes numerical examples to support the effectiveness of the developed model. Finally, sensitivity analysis on some parameters on optimal solution is provided.
Highlights
It is commonly observed that most of the physical goods in which appreciable deterioration can take place when the item in stock undergoes changes or becomes out of fashion and the loss must be taken into account when analyzing the model
The article deals with an economic order quantity (EOQ) inventory model for deteriorating items in which the supplier provides the purchaser a permissible delay in payment
This is so when deterioration of units in the inventory is subject to constant deterioration rate, demand rate is quadratic function of time and salvage value is associated with the deteriorated units
Summary
It is commonly observed that most of the physical goods in which appreciable deterioration can take place when the item in stock undergoes changes or becomes out of fashion and the loss must be taken into account when analyzing the model. Dave and Patel [8] first presented the inventory model for deteriorating items with a linear increasing demand as time-varying demand and constant deterioration rate with no shortages over a finite horizon. An optimal inventory model for deteriorating items with two-staged demand rate and time-proportional deterioration rate and no shortages is studied by Singh et al [10]. They determined EOQ and suggested optimal solution by considering demand rate as constant in first part of the cycle and linear increasing in the other part.
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