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Eoq Model For Time-Dependent Deterioration Rate With A Temporary Price Discount

Author

Listed:
  • BHAVIN J. SHAH

    (Department of Mathematics and Statistics, B.K. Majumdar Institute of Business Administration — H.L.B.B.A., Navrangpura, Ahmedabad 380009, Gujarat, India)

  • NITA H. SHAH

    (Department of Mathematics, Gujarat University, Ahmedabad 380009, Gujarat, India)

  • Y. K. SHAH

    (Department of Statistics, Gujarat University, Ahmedabad 380009, Gujarat, India)

Abstract

Deterioration is defined as decay, damage, spoilage, evaporation, obsolescence, pilferage, and loss of utility or loss of marginal value of a commodity that reduces usefulness from original ones. Blood, fish, fruits and vegetables, alcohol, gasoline, radioactive chemicals, medicines, etc., lose their utility with respect to time. In this case, a discount price policy is implemented by the suppliers of these products to promote sales. In this study, a mathematical model is developed for an inventory system that considers a temporary price discount when commodities in an inventory system are subject to deterioration with respect to time. Our goal in this article is to maximize the difference between two costs (gain) — taking advantage of price discount by ordering a large quantity, which in turn increases inventory holding cost as well deterioration cost and by not ordering a large quantity at a discounted price. An attempt is made to find bounds on the beneficial discount rate. The model is supported with a numerical example.

Suggested Citation

  • Bhavin J. Shah & Nita H. Shah & Y. K. Shah, 2005. "Eoq Model For Time-Dependent Deterioration Rate With A Temporary Price Discount," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 22(04), pages 479-485.
    • Handle: RePEc:wsi:apjorx:v:22:y:2005:i:04:n:s0217595905000649
    DOI: 10.1142/S0217595905000649
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    Citations

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    Cited by:

    1. Yan, Changyuan & Banerjee, Avijit & Yang, Liangbin, 2011. "An integrated production-distribution model for a deteriorating inventory item," International Journal of Production Economics, Elsevier, vol. 133(1), pages 228-232, September.
    2. Mehran Ullah & Biswajit Sarkar & Iqra Asghar, 2019. "Effects of Preservation Technology Investment on Waste Generation in a Two-Echelon Supply Chain Model," Mathematics, MDPI, vol. 7(2), pages 1-20, February.
    3. Wang, Xiaojun & Li, Dong, 2012. "A dynamic product quality evaluation based pricing model for perishable food supply chains," Omega, Elsevier, vol. 40(6), pages 906-917.
    4. Chih-Te Yang & Liang-Yuh Ouyang & Kun-Shan Wu & Hsiu-Feng Yen, 2012. "Optimal ordering policy in response to a temporary sale price when retailer's warehouse capacity is limited," European Journal of Industrial Engineering, Inderscience Enterprises Ltd, vol. 6(1), pages 26-49.
    5. Wang, X. & Li, D. & O'brien, C. & Li, Y., 2010. "A production planning model to reduce risk and improve operations management," International Journal of Production Economics, Elsevier, vol. 124(2), pages 463-474, April.
    6. Mrudul Y. Jani & Manish R. Betheja & Urmila Chaudhari & Biswajit Sarkar, 2023. "Effect of Future Price Increase for Products with Expiry Dates and Price-Sensitive Demand under Different Payment Policies," Mathematics, MDPI, vol. 11(2), pages 1-31, January.
    7. Pahl, Julia & Voß, Stefan, 2014. "Integrating deterioration and lifetime constraints in production and supply chain planning: A survey," European Journal of Operational Research, Elsevier, vol. 238(3), pages 654-674.

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