Effect of deteriorating items on the instantaneous replenishment model

Abstract

The physical characteristics of stocked items dictate the nature of inventory policies implemented to manage and control. The traditional economic order quantity model (EOQ ) assumes that items stocked preserve their characteristics during their stay in inventory. The question is how reliable are the EOQ modelswhen items stocked deteriorate over time. This paper introduces a modified EOQ model in which it assumes that a percentage of the on-hand inventory is wasted due to deterioration. A mathematical model is developed and numerical examples provided to illustrate the solution procedure.