Abstract
It was usually observed in typical EOQ inventory models that the holding cost, the purchasing cost and the demand rate are constant and the purchasing cost is irrespective of the order size. But practically, the demand rate is based on various factors including sale price, seasonality and availability. Due to the lengthening of shortage periods, the holding cost per unit item increases. Also with the inclusion of quantity discounts, the unit purchasing cost is usually decreased for higher order sizes. This article addresses jointly with the inconsistency of the rate of demand, unit purchasing cost and unit holding cost for deteriorating items. This paper proposes a model based on an inventory problem including selling price of products and stock-dependent market demand rate, holding cost based on storage time and purchasing cost is influenced by order size by offering all units quantity discounts. An algorithm for estimating the optimum solution of decision variables by maximizing total profit and minimizing the overall cost of the model is developed in this paper. Validation of the developed model is confirmed with the help of a numerical example along with the sensitivity-analysis of decision variables by varying various inventory parameters.
Highlights
Most of the earlier literature work based on inventory control models is derived with an assumption of fixed demand rate
This paper mainly focuses on developing an inventory model which includes the concept of deterioration of items kept in stock with continuously decreasing demand depending on selling price as well as inventory level at time t, with holding cost based on constant co-efficient as well as variable co-efficient, raises the cost linearly with respect to time period and the purchasing cost is influenced by order size
In order to visualize the practical scenario, the demand rate is dependent on selling price and time, a cost associated with holding of items based on storage period, and the purchasing cost on the basis of the size of the order, depending on all units quantity discounts are considered for deteriorating items
Summary
Most of the earlier literature work based on inventory control models is derived with an assumption of fixed demand rate. In the majority of these models, demand rate is considered to be an independent exogenous variable. Demand rate is a very crucial factor in uplifting the total profit of any business. There are many factors like selling price, obtainability of items influencing demand rate. This paper mainly focuses on developing an inventory model which includes the concept of deterioration of items kept in stock with continuously decreasing demand depending on selling price as well as inventory level at time t , with holding cost based on constant co-efficient as well as variable co-efficient, raises the cost linearly with respect to time period and the purchasing cost is influenced by order size. On the basis of these assumptions, and by framing a mathematical model, the optimal solution is computed by maximizing the total profit and minimizing the total cost
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