Research on Inventory Model for Non-Instantaneous Deteriorating Items Taking into Account Time Value of Money

Abstract

With the development of fresh food supermarket, logistics industry, and electronics industry, the inventory management and control of deteriorating items have been paid more attention. Since some extra cost produces to deal with deteriorating items, their inventory management is more complex than non-deteriorating items inventory management. Some deteriorating items have a span of maintaining quality or the original condition, namely, during that period, there is no deterioration occurring. In this study, an inventory problem for non-instantaneous deteriorating items. In the inventory system, shortages are allowed, and the time value of money and inflation are considered. A general framework of the inventory system for non-instantaneous deteriorating items is given. Some numerical examples are presented and the influences of the time value of money and inflation rate on the replenishment policy are investigated. The results have shown that with the increasing of the discount rate of time-value of money and the decreasing of the inflation rate, the optimal order time, the average total costs per time and the optimal order quantity gradually decrease.