Inventory model for deteriorating items with incremental holding cost under partial backlogging

Abstract

The present paper deals with an inventory model for deteriorating items with dynamic demand. Shortages are allowed and partially backlogged. The demand has been considered as the function of inventory level during storage period and function of time during shortage period. Storage period is divided into n distinct time periods. In practice, longer storage period requires additional specialised equipment and facilities to keep the products away from deterioration. So, it is assumed that holding cost is increasing step function. The model has been discussed for n arbitrary distinct time periods of storage time and a numerical example has been solved for n = 1 and 2. The sensitivity analysis has been performed in order to examine the effect of various costs and parameters on optimal policy.