Issue: 2019/Vol.29/No.3, Pages 37-49

AN EOQ MODEL FOR DETERIORATING ITEMS WITH TIME-DEPENDENT EXPONENTIAL DEMAND RATE AND PENALTY COST

Sushil Kumar

Full paper (PDF)    RePEC

Cite as: S. Kumar. An EOQ model for deteriorating items with time-dependent exponential demand rate and penalty cost. Operations Research and Decisions 2019: 29(3), 37-49. DOI 10.37190/ord190303

Abstract
The present paper deals with an EOQ model for deteriorating items with time-dependent exponential demand rate and partial backlogging. Shortages are allowed and completely backlogged in this model. The backlogging rate of unsatisfied demand is assumed as a function of waiting time. The concept of penalty cost is introduced in the proposed model because there are many perishable products that do not deteriorate for some period of time and after that period they continuously deteriorate and lose their values. This loss can be incurred as penalty cost to the wholesalers/retailers. In any business organization, the penalty cost has an important role for special types of seasonal products and short life products. Therefore, the total cost of the product can be reduced by maximizing the demand rate and minimizing the penalty cost during a given period of time. The purpose of our study is to optimise the total variable inventory cost. A numerical example is also given to show the applicability of the developed model.

Keywords: inventory, deterioration, penalty cost and time-dependent exponential demand rate

Received: 25 May 2018    Accepted: 24 October 2019