(A) study on inventory models for a system with deterioration

Abstract

Several inventory models are considered in which the inventory is depleted not only by demand but also by deterioration. The problem of simultaneously setting price and ordering quantity for items with Weibull deterioration is considered. A model with deterministic demand and instantaneous supply in which the demand is a decreasing function of the price is adopted. Simultaneous equations that can be solved by numerical method are established for determination of the optimal price and the ordering quantity for two different cases, with shortage and without shortage. For the no shortage, an example is solved and the sensitivity of its optimal solutions to change of parameters is studied. Production lot sizing problem for a system with exponentially decaying inventory is considered. From the exact cost function developed, an approximate cost function is derived using Taylor series expansion. An approximate optimal solution is derived and shown better than the Misra``s result(6). And some notable properties of the formula are commented. Determination of both the reorder point and the ordering quantity for a system with stochastic demand or lead time and with exponential deterioration is considered.