A lot of work has been done in determining the inventory level of
deteriorating items, by allowing as well as not allowing shortages, by different researchers
over last three decades. Traditional inventory model considers the ideal case in
which depletion of inventory is caused by constant demand rate, though inventory
loss also occur due to deterioration. Constant demand rate is not appropriate in
general. Nowadays, the customers are allowed a grace period to settle their account with
the supplier, without having to pay any interest for that period, which gives the
customers big advantage and allows the business to grow. Shortages are very
important, especially in a model that considers delay in payment due to the fact that
shortages can affect the quantity ordered to benefit from the delay in payment.
Ghare and Schrader (1963) and Aggarwal and Jaggi (1995) have developed
models with constant decaying rate. Lot of work has been done in deteriorating
inventory systems. Misra (1975) has developed a model with a finite replenishment rate,
but he did not consider backordering, while Shah (1977) has generalized Ghare
and Schrader's model to allow for backordering, but replenishment rate was
considered as infinite. Wee (1995) has determined the lot-size for a declining market,
while Heng et al. (1991) have integrated Shah's and Misra's models to consider a
lot-size, order-level inventory system with finite replenishment rate, constant demand
rate and exponential decay. Goyal (1985) has developed an Economic Order
Quantity (EOQ) under the conditions of permissible delay in payments. Hariga (1995)
and Bose et al. (1995) have developed EOQ models, that focus on deteriorating items
with time-varying demand and shortages. |
