Abstract
An economic order quantity (EOQ) inventory model for deteriorating goods is developed with a linear, positive trend in demand allowing inventory shortages and backlogging. The effects of inflation and the time-value of money are incorporated into the model, considering two separate inflation rates: namely, the internal (company) inflation rate and the external (general economy) inflation rate. It is assumed that the goods in the inventory deteriorate over time at a constant rate θ. The inventory policy is discussed over a finite time-horizon with several reorder points. The results are discussed with a numerical example and a 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 in brief.
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Bose, S., Goswami, A. & Chaudhuri, K. An EOQ Model for Deteriorating Items with Linear Time-dependent Demand Rate and Shortages under Inflation and Time Discounting. J Oper Res Soc 46, 771–782 (1995). https://doi.org/10.1057/jors.1995.107
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DOI: https://doi.org/10.1057/jors.1995.107