An optimal ordering policy for deteriorating items varying with stock dependent demand and time-proportional deterioration under permissible delay in payment

Abstract

The paper deals with an EOQ (Economic Order Quantity) model for deteriorating items with the following characteristics:

1. Deteriorating items follow time-proportional deterioration rate.

2. Shortages are allowed and fully backlogged.

3. Conditions of permissible delay in payments are considered.

4. Demand is deterministic and stock dependent.

The objective of the proposed model is to determine the optimal shortage time point, the optimal cycle time, the optimal order quantity and the optimal total average cost.

The effectiveness of this model is validated with a couple of numerical examples and the sensitivity analysis of the optimal solutions to changes in the values of the various parameters associated with the model has been performed.

Keywords:

• EOQ
• Permissible delay in payments
• Shortages
• Stock dependent demand
• Time-proportional deterioration

2010 AMS subject classification:

• 90B05