Open AccessAn EOQ inventory model for deteriorating items with controllable deterioration rate under stock-dependent demand rate and non-linear holding cost
Author(s) -
Shuhua Zhang,
Longzhou Cao,
Zuliang Lu
Publication year - 2022
Publication title -
journal of industrial and management optimization
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.325
H-Index - 32
eISSN - 1553-166X
pISSN - 1547-5816
DOI - 10.3934/jimo.2021156
Subject(s) - reorder point , economic order quantity , stock (firearms) , economic shortage , uniqueness , profit (economics) , mathematics , computer science , econometrics , operations research , economics , business , microeconomics , supply chain , mechanical engineering , mathematical analysis , linguistics , philosophy , marketing , government (linguistics) , engineering
The main purpose of this paper is to investigate the retailer's strategy in selecting the order-up-to level, the reorder point and the preservation technology investment for deteriorating items, aiming to maximize his total profit per unit time. We formulate the problem into a mathematical model that takes into account stock-dependent demand rate, stock-dependent holding cost. The terminal conditions are relaxed to allow that the reorder point can be one of the following two cases: (1) \begin{document}$ N\leq0 $\end{document} , i.e., the reorder point may be negative or zero. When the reorder point is negative, the shortage is allowed and partial backlogged. (2) \begin{document}$ N\geq0 $\end{document} , i.e., the reorder point may be without shortage or zero. We prove the existence and uniqueness of the optimal order-up-to level, the reorder point and the preservation technology investment under any given two of them for both the two cases. We then present an algorithm to search for decision variables such that the total profit per unit time is maximized. Finally, numerical examples, comparisons in performance and sensitivity analysis are carried out to examine the results obtained. On the basis of the above results, some useful managerial insights are revealed.