2011•Journal of Chaohu CollegeRequires access

OPTIMAL ORDER POLICY FOR DETERIORATING ITEMS WITH INVENTORY-LEVEL-DEPENDENT HOLDING COST AND SHORTAGE

Yu Neng

Abstract

Holding costs are supposed to be fixed in the traditional researches on inventory.Taking the change rate in holding costs as the function for the amount of inventory,the paper develops economic order quantity models for deteriorating items with the demand rate as a polynomial function of the retailer′s current inventory level.Then we work out the conditions of the existence and uniqueness of the optimal solutions that could make the average profit unit time to a maximum when shortage is allowed and backlogged completely.At last,numerical examples and sensitive analysis of major parameters are presented to illustrate the developed model.

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Key concepts: Economic shortage, Holding cost, Economic order quantity, Uniqueness, Profit (economics), Inventory cost, Order (exchange), Function (biology)