Title: An optimal inventory model with partial backorders and diminishing demand rate

Authors: Cheng-Hsiung Lee; Hung-Lin Lai; Jinshyang Roan

Addresses: Department of International Trade, Chihlee University of Technology, 313, Sec. 1, Wunhua Rd., Banciao District, New Taipei City, 22050, Taiwan ' Department of International Trade, Chihlee University of Technology, 313, Sec. 1, Wunhua Rd., Banciao District, New Taipei City, 22050, Taiwan ' Department of International Trade, Chihlee University of Technology, 313, Sec. 1, Wunhua Rd., Banciao District, New Taipei City, 22050, Taiwan

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.

Keywords: inventory model; partial backorders; diminishing demand rate; stock-out period.

DOI: 10.1504/IJMIC.2017.087044

International Journal of Modelling, Identification and Control, 2017 Vol.28 No.4, pp.326 - 335

Received: 06 Sep 2016
Accepted: 04 Oct 2016
Published online: 05 Oct 2017 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article