Optimal production strategy for deteriorating items with varying demand pattern under inflation

Abdul, I.; Murata, A.

Abstract: This paper presents production-inventory models for deteriorating items with increasing-steady-decreasing demand pattern under the effect of inflation and time value of money. This type of demand behavior can be observed in some fashion products or seasonal products in general. Shortages are allowed with partial backlogging of demand and a two-parameter Weibull-distribution function is used for the deterioration of items in order to make the models more generalized and realistic. The models generate optimal values of initial production run time, onset of shortages, production recommencement time, and total production quantity that minimizes the total relevant costs of production and inventory for any given set of system parameters. Various possible production strategies available for items with variable demand pattern are examined to determine the optimal production strategy. The discounted cash flow approach and trust region optimization methods are used to obtain the optimal results. The Numerical examples and sensitivity analysis show that the optimal production strategy may vary with changes in system parameters.

How to cite this paper

        APA: Abdul, I & Murata, A. (2011). Optimal production strategy for deteriorating items with varying demand pattern under inflation. International Journal of Industrial Engineering Computations, 2(3), 449-466.
    

        Chicago/Turabian: Abdul, I & Murata, A. 2011. "Optimal production strategy for deteriorating items with varying demand pattern under inflation." International Journal of Industrial Engineering Computations 2, no. 3 (2011): 449-466.
    

        AMA: Abdul, I & Murata, A. Optimal production strategy for deteriorating items with varying demand pattern under inflation. International Journal of Industrial Engineering Computations. 2011;2(3):449-466.
    

References

Abad, P. L. (2003). Optimal pricing and lot-sizing under conditions of perishability, finite production and partial backordering and lost sale. European Journal of Operational Research, 144, 677–685.

Abdul, I. & Murata, A. (2011). An inventory model for deteriorating items with varying demand pattern and unknown time horizon. International Journal of Industrial Engineering Computations, 2, 61-86.

Alfares, H. K., Khursheed, S. N. & Noman, S. M. (2005). Integrating quality and maintenance decisions in a production inventory model for deteriorating items. International Journal of Production Research, 43 (5), 899–911.

Balkhi, Z. T. (2001). On a finite horizon production lot size inventory model for deteriorating items: An optimal solution. European Journal of Operational Research, 132, 210-223.

Chern, M-S., Yang, H-L., Teng, J-T. & Papachristos, S. (2008). Partial backlogging inventory lot-size models for deteriorating items with fluctuating demand under inflation. European Journal of Operational Research, 191, 127–141.

Chang, H-J., Hung, C-H. & Dye, C-Y. (2002). A finite horizon inventory model with deterioration and time-value of money under the conditions of permissible delay in payments. International Journal of Systems Science, 33(2), 141-151.

Chang, H-J., Teng, J-T, Ouyang, L-Y. & Dye, C-Y. (2006). Retailer's optimal pricing and lot-sizing policies for deteriorating items with partial backlogging. European Journal of Operational Research, 168, 51–64.

Cheng, M. & Wang, G. (2009). A note on the inventory model for deteriorating items with trapezoidal type demand rate. Computers & Industrial Engineering, 56, 1296-1300.

Chung, K-J. & Tsai, S-F. (2001). Inventory systems for deteriorating items with shortages and a linear trend in demand taking account of time value. Computers & Operations Research, 28, 915-934.

Dey, J. K., Mondal, S. K. & Maiti, M. (2008). Two storage inventory problem with dynamic demand and interval valued lead-time over finite time horizon under inflation and time-value of money. European Journal of Operational Research, 185, 170–194.

Ghare, P.M. & Schrader, G.F. (1963). A model for exponential decaying inventory. Journal of Industrial Engineering, 14, 238-243.

Goyal, S. K. & Giri, B. C. (2003). The production–inventory problem of a product with time varying demand, production and deterioration rates. European Journal of Operational Research, 147, 549–557.

Hariga, M. A. (1995). An EOQ model for deteriorating items with shortages and time-varying demand. Journal of the Operational Research Society, 46, 398-404.

Hedjar, R., Bounkhel, M. & Tadj, L. (2004). Predictive control of periodic-review of production inventory systems with deteriorating items. Sociedad de Estadistica e Investigacion Operativa Top, 12(1), 193-208.

Hou, K-L. (2006). An inventory model for deteriorating items with stock-dependent consumption rate and shortages under inflation and time discounting. European Journal of Operational Research, 168, 463–474.

Hill, R. M. (1995). Inventory model for increasing demand followed by level demand. Journal of the Operational Research Society, 46, 1250–1259.

Jaggi, C. K., Goel, S. K. & Mittal, M. (2011). Economic order quantity model for deteriorating items with imperfect quality and permissible delay on payment. International Journal of Industrial Engineering Computations, 2, pp. 237-248.

Jolai, F., Tavakkoli-Moghaddam, R., Rabbani, M. & Sadoughian, M. R. (2006). An economic production lot size model with deteriorating items, stock-dependent demand, inflation, and partial backlogging. Applied Mathematics and Computation, 181, 380–389.

Lin, Y. & Lin, C. (2006). Purchasing model for deteriorating items with time-varying demand under inflation and time discounting. International Journal of Advance Manufacturing Technology, 27, 816–823.

Lo, S-T., Wee, H. W. & Huang, W-C. (2007). An integrated production-inventory model with imperfect production processes and Weibull distribution deterioration under inflation. International Journal of Production Economics, 106, 248-260.

Mahata, G. C. & Goswami, A. (2009). A fuzzy replenishment policy for deteriorating items with ramp-type demand rate under inflation. International Journal of Operational Research, 5, 328 – 348.

Maity, K. & Maiti, M (2005). Numerical approach of multi-objective optimal control problem in imprecise environment. Fuzzy Optimization and Decision Making, 4, 313–330.

Mandal, B. & Pal, A. K. (1998). Order level inventory system with ramp-type demand rate for deteriorating items. Journal of Interdisciplinary Mathematics, 1, 49–66.

Manna, S. K. & Chaudhuri, K. S. (2006). An EOQ model with ramp-type demand rate, time dependent deterioration rate, unit production cost and shortages. European Journal of Operational Research, 171, 557–566.

Manna, S. K. & Chiang, C. (2010). Economic production quantity models for deteriorating items with ramp-type demand. International Journal of Operational Research, 7, 429-444.

Misra, R. B. (1975). Optimum production lot size model for a system with deteriorating inventory. International Journal of Production Research,　13, 495-505.

Moon, I., Giri, B. C. & Ko, B. (2005). Economic order quantity models for ameliorating/deteriorating items under inflation and time discounting. European Journal of Operational Research, 162, 773–785.

Nahmias, S. (1982). Perishable inventory theory: A review. Operations Research, 30, 680-708.

Ouyang, L-H., Teng, J-T. & Chen, L-H. (2006). Optimal ordering policy for deteriorating items with partial backlogging under permissible delay in payments. Journal of Global Optimization, 34, 245–271.

Papachristos, S. & Skouri, K. (2000). An optimal replenishment policy for deteriorating items with time-varying demand and partial (exponential type) backlogging. Operations Research Letters, 27, 175-184.

Pal, S., Maiti, M.K. & Maiti, M. (2009). An EPQ model with price discounted promotional demand in an imprecise planning horizon via Genetic Algorithm, Computers and Industrial Engineering, 57, 181-187.

Panda, S., Saha, S. & Basu, M. (2009a). Optimal production stopping time for perishable products with ramp-type quadratic demand dependent production and setup cost, Central European Journal of Operational Research, 17, 381-396.

Panda S., Senapati, S. & Basu, M. (2009b). A single cycle perishable inventory model with time dependent quadratic ramp-type demand and partial backlogging. International Journal of Operational Research, 5, 110 – 129.

Raafat, F. (1991). Survey of literature on continuously deteriorating inventory models. Journal of the Operational Research Society, 42, 27–37.

Shah, N. H. (2006). Inventory model for deteriorating items and time value of money for a finite time horizon under the permissible delay in payments. International Journal of Systems Science, 37(1), 9-15.

Sridevi, G., Nirupama Devi, K. & Srinivasa Rao, K. (2010). Inventory model for deteriorating items with Weibull rate of replenishment and selling price dependent demand. International Journal of Operational Research, 9, 329 – 349.

Taft, E.W. (1918). The most economical production lot. The Iron Age, 101, 1410-1412.

Taleizadeh, A. A., Wee, H. M. & Sadjadi, S. J. (2010). Multi-product production quantity model with repair failure and partial backordering. Computers & Industrial Engineering, 59, 45-54.

Urban, T.L. (2005). Inventory models with inventory-level-dependent demand: A comprehensive review and unifying theory. European Journal of Operational Research, 162, 792-804.

Wee, H. M. & Law, S-T. (2001). Replenishment and pricing policy for deteriorating items taking into account the time-value of money. International Journal of Production Economics, 71, 213-220.

Wu, K-S. (2001). An EOQ inventory model for items with Weibull distribution deterioration, ramp-type demand rate and partial backlogging. Production Planning and Control, 12(8), 787–793.

Yang, P. & Wee, H. (2003). An integrated multi-lot-size production inventory model for deteriorating item. Computer & Operations Research, 30(5): 671- 682.

Yang, H-L. (2005). A comparison among various partial backlogging inventory lot-size models for deteriorating items on the basis of maximum profit. International Journal of Production Economics, 96, 119–128.

Yu, J. C. P. (2007). A joint economic production lot size model for a deteriorating item with decreasing warehouse rental overtime. In: O. Gervasi & M. Gavrilova (Eds.). Computational Science and Its Application, Springer, Berlin, LNCS 4705, 8.