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Optimal inventory replenishment models for deteriorating items taking account of time discounting

Authors
Journal
Computers & Operations Research
0305-0548
Publisher
Elsevier
Publication Date
Volume
28
Issue
1
Identifiers
DOI: 10.1016/s0305-0548(99)00087-8
Keywords
  • Inventory
  • Deteriorating
  • Inflation
  • Time Discounting

Abstract

Abstract This paper follows the discounted cash flow (DCF) approach to investigate inventory replenishment problem for deteriorating items taking account of time value of money over a fixed planning horizon. We develop models and optimal solutions with complete backlogging and without backlogging and prove that the total variable cost is convex. The results are discussed through numerical examples. Sensitivity analysis of the optimal solution with respect to the parameters of the system is carried out. Scope and purpose Traditional EOQ inventory models assume that the products have infinite shelf-life and neglect the effect of time discounting. The present paper deals with the inventory replenishment problem for deteriorating items taking account of time discounting. The main purpose of this paper is to establish replenishment models and develop optimal replenishment policies for items having characteristic of deterioration taking account of time value of money.

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