Inspection policy for inventory system with deteriorating products

Allen H. Tai, Yue Xie, Wai Ki Ching

Research output: Journal article publicationJournal articleAcademic researchpeer-review

8 Citations (Scopus)

Abstract

Typical inventory models usually focus on screening out the deteriorating items, not much attention is paid to the situation that a proportion of deteriorated items are sold to consumers together with serviceable items during a replenishment cycle. This paper first presents a model to formulate the process of such kind of mixed sales. A simple closed-form solution is obtained for maximizing the net profit per unit time under the assumption of small deterioration rate. The effect of shortage back-ordering is then considered and closed-form solutions of optimal ordering quantity and replenishment time are obtained under similar assumption. We further study the effect of inspection policies on optimal decisions for a deteriorating inventory system. A dynamic programming approach is proposed for solving the optimal policy. Numerical examples are then provided to demonstrate our conclusions and results.

Original languageEnglish
Pages (from-to)22-29
Number of pages8
JournalInternational Journal of Production Economics
Volume173
DOIs
Publication statusPublished - Mar 2016

Keywords

  • Back-ordering
  • Deteriorating items
  • Dynamic programming
  • Inspecting policy
  • Ordering quantity
  • Replenishment time

ASJC Scopus subject areas

  • Business, Management and Accounting(all)
  • Economics and Econometrics
  • Management Science and Operations Research
  • Industrial and Manufacturing Engineering

Cite this