An economic order quantity model with nonlinear holding cost, partial backlogging and ramp-type demand

ABSTRACT

In this article, a deterministic inventory model with a ramp-type demand depending on price and time is developed. The cumulative holding cost is assumed to be a nonlinear function of time. Shortages are allowed and are partially backlogged. Thus, the fraction of backlogged demand depends on the waiting time and on the stock-out period. The aim is to maximize the total profit per unit time. To do this, a procedure that determines the economic lot size, the optimal inventory cycle and the maximum profit is presented. The inventory system studied here extends diverse inventory models proposed in the literature. Finally, some numerical examples are provided to illustrate the theoretical results previously propounded.

KEYWORDS:

• EOQ model
• nonlinear holding cost
• partial backlogging
• ramp-type demand
• profit maximization

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Funding

This work is partially supported by the Spanish Ministry of Science and Innovation (MICINN) and European FEDER funds [research project MTM2013-43396-P].