Far East Journal of Theoretical Statistics
Volume 6, Issue 2, Pages 107 - 120
(March 2002)
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AN EOQ MODEL FOR DETERIORATING ITEMS WITH DECREASING DEMAND
AND SHORTAGES UNDER INFLATION AND TIME DISCOUNTING
Ajay S. Gor (India), Nita H. Shah (India) and C. C. Gujarathi (India)
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Abstract: The effects of inflation and time value of money on an
economic order quantity model for deteriorating items is developed with a
linear, negatively trended demand allowing shortages. The model considers the
internal (company) inflation rate and the external (general economy) inflation
rate. It is assumed that the items in inventory deteriorate over time at a
constant rate. The inventory policy is studied over a finite time horizon with
several reorder points. The results are discussed with a numerical example and
sensitivity analysis of the optimal solution with respect to the parameters of
the system is carried out. Several particular cases of the model are discussed. |
Keywords and phrases: EOQ model,
deteriorating items, decreasing demand, inflation, time discounting. |
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