Analysis of some decaying inventory systems with a class of issuing policies

Abstract

An area of decaying inventory system considering multi-echelon structure and issuing policies has received very little attention to date. However, many questions have remained to be considered in this area with the importance in real-life situations. This study is concerned with the development of decaying inventory models which are intended to cover more practical and new fields in decaying inventory system than those of previous works. Since inventory depletion policy is closely related to the decaying inventory system, we consider a class of issuing policies, Last-in First-out(LIFO) and First-in First-out(FIFO), throughout this study. This study is performed according the three areas ; first, we represent a production lot size inventory model for the items whose utility is decreasing and lostsover time in accordance with a general probability distribution. Two special cases, exponential distributed deterioration and weibull distributed deterioration, are considered and a numerical example problem is examined. Second, we consider a two-echelon inventory system with constant deterioration rate where the upper echelon is a supply center and the lower echelon is consisted of N retailers. We formulate a basic model and analyze the renewal single cycle and stationary policies. For optimal operating policy, we develop an effective Heuristic Algorithm which may be widely used for practical multi-echelon deteriorating inventory problems. Finally, we develop a perishable inventory model for items under go age dependent decay and face no decrease in value or utility during their fixed lifetime. We analyse the effects of uncertainty of the product usable-lifetime when it enters inventory system on optimal ordering policy. As a special case we examine a case of the three period lifetime.