Replenishment Policy for Items Having a Fixed Shelf Life under Permissible Delay and Variable Lead Time

Sarbjit Singh

doi:10.13189/ujaf.2015.030502

Abstract

All organizations whether manufacturing or service have to keep inventory for smooth running of their business processes. This study is devoted to the items like medicines, cosmetics which are having a fixed shelf life, i.e. they will be of no use after some prescribed time. This model also considers the permissible delay which means that the buyer can pay for goods after some fixed time and has to pay interest after that fixed time. The demand considered here is fixed constant demand. The lead time varies as per the availability of the product and follows normal distribution.

Highlights

One of the most developed fields of operations management is inventory management
There is mention of economic order quantity as minimal quantity, cost in book purchasing and storing by Ralph Currier Davis [5].The objective is to determine economic order quantity, Q, which minimizes the total cost of an inventory system when the demand occurs at a constant rate
This paper is an extension of the classical EOQ model in which items considered are perishable items which obsolete after some fixed time. This model converts into a classical EOQ model if shelf life of the items is more than the cycle period; the concept of permissible delay has been included in both classical EOQ as well as the proposed model

Summary

Introduction

One of the most developed fields of operations management is inventory management. Inventory has been defined as idle resources that possess economic value by Monks [1]. The economic order quantity model was first developed by Ford Harris [2 &3] but R. Jamal and Wang [8] developed a supply chain model for perishable products under inflation and permissible delay in payment. This paper is an extension of the classical EOQ model in which items considered are perishable items which obsolete after some fixed time. This model converts into a classical EOQ model if shelf life of the items is more than the cycle period; the concept of permissible delay has been included in both classical EOQ as well as the proposed model. Special case has been discussed where this model has been applied and lead time considered in the model is a probabilistic model which follows normal distribution

Notation and Assumptions

Mathematical Model and Analysis

Numerical Illustrations

Concluding Remarks