An optimal inventory model with partial backorders and diminishing demand rate
by Cheng-Hsiung Lee; Hung-Lin Lai; Jinshyang Roan
International Journal of Modelling, Identification and Control (IJMIC), Vol. 28, No. 4, 2017

Abstract: Most of the inventory models discuss two extreme situations with respect to the demand in stock-out period. In this research, the demand rate within stock-out period is assumed as a diminishing function of backorders. Shortage of inventory will lead to the opportunity cost of lost sales. This research considers backorders and lost sales to formulate an inventory model with partial backorders. The objective of the inventory model is to determine the time scales of inventory depletion and stock-out periods in order to minimise total relevant cost. An efficient algorithm is developed to find the optimal solution. Finally, a sensitivity analysis is performed to study the effects of the model parameters on the optimal solution. This research apparently makes an improvement compared to the previous works, and further fits the requirements of practical environment.

Online publication date: Thu, 05-Oct-2017

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