A solution procedure to determine inventory replenishment policies for deteriorating items in a declining market

Abstract

In 1995, Wee presented a deterministic lot size inventory model for deteriorating items with shortages and a declining market. In Wee’s paper, the method of Newton is applied to the derivative of the total cost function to get the optimal solution. First, this paper reveals that the method of Newton does not necessarily converge to the optimal solution with an arbitrary initial point. Second, this paper proposes a modification to improve the solution procedure of Wee such that the method of Newton converges to the optimal solution independent of the choice of the initial point. Numerical examples demonstrate that the solution procedure in this paper is rather accurate and rapid.