tailieunhanh - An EOQ model for a deteriorating item with non-linear demand under inflation and a trade credit policy

This paper develops an infinite time-horizon deterministic economic order quantity (EOQ) inventory model with deterioration based on discounted cash flows (DCF) approach where demand rate is assumed to be non-linear over time. The results are illustrated with a numerical example. Sensitivity analysis of the optimal solution with respect to the parameters of the system is carried out. | Yugoslav Journal of Operations Research 15 (2005), Number 2, 209-220 AN EOQ MODEL FOR A DETERIORATING ITEM WITH NON-LINEAR DEMAND UNDER INFLATION AND A TRADE CREDIT POLICY S. K. MANNA, Department of Mathematics, Sovarani Memorial College, Jagatballavpur, Howrah, India skmanna-5@ K. S. CHAUDHURI Department of Mathematics, Jadavpur University, Kolkata, India k-s-chaudhuri@ Received: October 2003 / Accepted: April 2004 Abstract: This paper develops an infinite time-horizon deterministic economic order quantity (EOQ) inventory model with deterioration based on discounted cash flows (DCF) approach where demand rate is assumed to be non-linear over time. The effects of inflation and time-value of money are also taken into account under a trade-credit policy of type " α / T1 net T". The results are illustrated with a numerical example. Sensitivity analysis of the optimal solution with respect to the parameters of the system is carried out. Keywords: Infinite-time horizon, deterioration, non-linear demand, inflation, trade-credit policy. 1. INTRODUCTION The effects of inflation and time-value of money were ignored in the classical inventory models. It was believed that inflation would not influence the cost and price components. The economic situation of most of the countries has changed considerably during the last 25 years due to large-scale inflation and sharp decline in the purchasing power of money. Buzacott (1975) and Misra (1975) were the first to develop EOQ models taking inflation into account. Both of them considered a constant inflation rate for all the associated costs and minimized the average annual cost to derive an expression for the economic lot size. Their work was extended by researchers like Chandra and Bahner (1985), Aggarwal (1981), Misra (1979), Bierman and Thomas (1977), Sarker and Pan (1994), etc. to cover considerations of time value of money, inflation rate, finite 210 . Manna, . Chaudhuri / An EOQ Model for a .