AN EXCESS INVENTORY MODEL OF DETERIORATING ITEMS TAKING ACCOUNT OF PRESENT VALUE

ABSTRACT

In this study, both deterioration and present value are considered to derive an economic time supply when there is excess inventory. An excess inventory model is developed for a deterministic perpetual inventory system. Our goal in this research is to maximize the net benefit during the infinite planning horizon. Numerical examples are provided lo illustrate the theory, ft is demonstrated that the percentage of extra net benefit when present value is considered is at least 24%. The percentage of the extra net benefit when deterioration is considered is over 16%. When both present value and deterioration are considered, the net benefit increase is over 50%. Thus the consideration of present value and deterioration is significant.