An optimal ordering policy for deteriorating items with partial backlogging and time varying selling price and purchasing cost under inflation
by Hui-Ling Yang
International Journal of Operational Research (IJOR), Vol. 31, No. 3, 2018

Abstract: In the last several years, most countries have suffered from large-scale inflation and sharp decline in the purchasing power of money. Due to high inflation rate, the time value of money goes down and the future worth of saving decreases. As a result, large capital to purchase item is needed, the selling price and purchasing cost is also affected. Consequently, it will highly affect the return on investment. Therefore, to consider both the inflationary effect and fluctuated selling price and purchasing cost simultaneously is important. Thus, I develop the inventory lot-size model as introduced in Yang (2012) and further take the effect of inflation into account. The proposed model also allows for: 1) time-varying demand; 2) time-varying partial backlogging rate; 3) time-varying selling price and purchasing cost which changed from one replenishment cycle to another. Based on profit maximisation, the optimal replenishment schedule which maximises the total profit exists uniquely. Sensitivity analysis for managerial policymaking is also performed. From the sensitivity analysis, we know that the total profit is relatively influenced by considering the effect of inflation as the selling price and purchasing cost is fluctuated at the replenishment time.

Online publication date: Fri, 09-Feb-2018

The full text of this article is only available to individual subscribers or to users at subscribing institutions.

 
Existing subscribers:
Go to Inderscience Online Journals to access the Full Text of this article.

Pay per view:
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.

Complimentary Subscribers, Editors or Members of the Editorial Board of the International Journal of Operational Research (IJOR):
Login with your Inderscience username and password:

Username:        Password:          Forgotten your password?

Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.

If you still need assistance, please email subs@inderscience.com