Purchasing model for deteriorating items with time-varying demand under inflation and time discounting

Lin, Yihsu; Lin, Chinho

doi:10.1007/s00170-004-2236-y

Cited by 18 publications

(4 citation statements)

References 23 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…The first EOQ model in this direction was developed by Buzacott (1975), taking inflation into account. Others models in this direction are by Ouyang et al (2003), Lin and Lin (2006), Manna and Chaudhuri (2006) and Sana (2010). Many other researchers extended their ideas to various interesting situations by considering the time-value of money, different inflation rates for the internal and external costs, finite replenishment rate, shortage, etc.…”

Section: Literature Reviewmentioning

confidence: 99%

A finite time horizon EOQ model with ramp-type demand rate under inflation and time-discounting

Roy

Chaudhuri

2011

IJOR

View full text Add to dashboard Cite

An economic order quantity (EOQ) inventory problem is discussed over a finite time for deteriorating items with shortages, where the demand rate is of the ramp-type. It is assumed that a constant fraction of the on-hand inventory deteriorates per unit time. The time-value of money and the effects of inflation are taken into account, considering two separate inflation rates: the internal (within the company) and the external (in general economy) inflation rates. The optimality condition for the cost function is analysed and established. The numerical solutions of the model are obtained by considering shortage and no shortage in inventory. Also, we compare this model with infinite time-horizon model. The sensitivity of the parameters involved in the model is also examined. Finally, some concluding remarks are made to highlight the importance of the present work.

show abstract

Section: Literature Reviewmentioning

confidence: 99%

A finite time horizon EOQ model with ramp-type demand rate under inflation and time-discounting

Roy

Chaudhuri

2011

IJOR

View full text Add to dashboard Cite

show abstract

“…Subsequent studies considered issues involving shortages, time value of money and permissible payment delay. Specifically, Chen (1998) ;Sarker, Jamal, and Wang (2000); Liao, Tsai, and Su (2000); Chung and Tsai (2001); Chung and Lin (2001); Wee and Law (2001); Balkhi (2004); Lin and Lin (2006); Hou (2006); Shah (2006); and Hou and Lin (2006) all considered the time value of money and investigated the effect of inflation in inventory systems, EOQ models and pricing policies for deteriorating items.…”

Section: Introductionmentioning

confidence: 99%

Economic ordering model for deteriorating items with random demand and deterioration

Huang

2013

International Journal of Production Research

View full text Add to dashboard Cite

In modern marketplaces, competitive products frequently face volatile demand. In particular, the majority of deteriorating items are frequently subject to dual uncertainty, simultaneously suffering from demand and deterioration. Accordingly, this study attempts to develop an economic ordering model for a newsboy-style deteriorating item with lognormal demand and Poisson-type deterioration. Finally, an effective and practical economic ordering model involving deteriorating inventory is developed for optimising the order quantity of a given deteriorating item during an upcoming selling period to maximise expected profits of retailers. Numerical examples demonstrate that, as expected, the proposed economic ordering model can obtain an optimal solution for the inventory problem involving deteriorating items under uncertain and random demand and deterioration. IntroductionThis study considers the situation where a retailer places a single-period order contract to purchase a quantity matching expected demand for a given deteriorating item during an upcoming selling period. The supplier then delivers the required quantity in advance of the selling period. Notably, the retailer can incur a sizeable financial loss if the order quantity deviates significantly from actual demand. Owing to extensive demand uncertainty, an effective order model has to make a trade-off between the loss from excessive numbers of unsold units and lost potential sales and thus maximise profit. Moreover, making this trade off is especially important for deteriorating goods with uncertain demand because of the frequently minimal salvage value remaining on unsold units; additionally, besides potential profit, in an intensively competitive environment lost sales likely incur substantial intangible losses, including market share, goodwill, and customer loyalty, and others. Furthermore, demand for products with short shelf life is relatively difficult to accurately predict, particularly under volatile demand. Examples include most seasonal goods, deteriorating/perishable items, and other items characterised by periodic ordering and often with a finite selling horizon.Besides volatile demand, another relevant issue is that most deteriorating items considerably decay or deteriorate over time. Foods such as fruits, vegetables and foodstuffs suffer direct spoilage; volatile liquids such as gasoline and alcohol evaporate; and electronic goods, grains, etc. deteriorate through a gradual loss of potential utility or quality. Decay or deterioration of deteriorating items in stock is thus a very real phenomena and needs to be considered in modelling ordering decisions.Inventory problems involving deteriorating items are commonly modelled using a single-period ordering model. The single-period ordering model, also known as the newsboy problem model, is generally applied to optimise order quantity so as to maximise total profit or minimise total cost for a given time period. Numerous researchers have examined newsboy-type problems. The literature on this subject ...

show abstract

“…They discussed two heuristic procedures including Phelp's approach and Silver-Meal approach, and developed a heuristic procedure of minimizing total relevant cost so as to lessen the computational difficulty. Lin and Lin (2006) [6] proposed a purchasing model to deal with the problem of partial backordering of perishable items. Dye et al (2006) [7] extended a production-inventory model by considering both lost sales and non-constant purchase cost.…”

Section: Introductionmentioning

confidence: 99%

A Dynamic EPQ Model for Time-Varying Demand Problem With Product Life Cycle

Fang

Yeh

2020

IEEE Access

View full text Add to dashboard Cite

The study explores a dynamic economic production quantity model whose demand function in consideration of market-trend issue to decide the optimal number of production cycles, the corresponding optimal production time points, and the best time to withdraw from the production line. The objective function of the total relevant costs considered in the model is formulated as a nonlinear programming problem, and a complete search procedure is developed to find the optimal solution of inventory cost. The characteristics of daily necessaries, technology products and fashion products are also analyzed to develop different strategies for the decision makers. The proposed model and algorithm not only provided the optimal solution of the production period and cycle time but also gave the suggestion of the best time to withdraw from the market. Moreover, in order to provide the managers with useful information of the impacts of inventory cost, Monte Carlo technique is used to simulate the stochastic demand. In considering of the stochastic demand, the situation of shortage will definitely happen without or insufficient safe stock. Finally, a numerical example and the corresponding sensitivity analyses are carried out to illustrate the features of our model by utilizing the search procedure developed in this study. INDEX TERMS inventory; economic production quantity; product life cycle; time-varying demand.

show abstract

Purchasing model for deteriorating items with time-varying demand under inflation and time discounting

Cited by 18 publications

References 23 publications

A finite time horizon EOQ model with ramp-type demand rate under inflation and time-discounting

A finite time horizon EOQ model with ramp-type demand rate under inflation and time-discounting

Economic ordering model for deteriorating items with random demand and deterioration

A Dynamic EPQ Model for Time-Varying Demand Problem With Product Life Cycle

Contact Info

Product

Resources

About