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Abstract
We develop a production-inventory model for deteriorating items with demand disruption. This differs from the conventional inventory model which is affected only by either deterioration or disruption. In real-life production-inventory systems, deterioration of products and demand disruption are inevitable. The objective of this paper is to address these issues and to be able to derive the optimal production run time and replenishment policy for spot market purchases. We divide the problem into different scenarios according to disruption's time and magnitude. In each scenario the optimal production and inventory plans are provided so that the manufacturer can satisfy the new demand and decrease the loss. Then a numerical example is used to illustrate the model.
Acknowledgements
The authors are thankful for the valuable comments of the anonymous referees for an earlier version of this paper. Their comments have significantly improved the paper. This work is supported by the National Natural Science Foundation of China (Nos. 71001025 and 70731003) and JSPS. Also, this research is partly supported by the Program for New Century Excellent Talents in University (No. NCET-10-0327) and the Ministry of Education of China: Grant-in-aid for Humanity and Social Science Research (No. 11YCZH139).