Inventory replenishment policies for deteriorating items in a declining market

Abstract

Abstract In this paper two mathematical models are developed for an inventory system in which the units are deteriorating at a constant rate and the demand rate decreases negative exponentially. In the first model it is assumed that replenishment orders are placed at equal intervals while in the second model the replenishment times are also variables and hence there is no need for the replenishment orders to be placed at equal intervals. Optimal replenishment policies are determined for both cases. A numerical example is used to illustrate the theory. Computational results indicate that the constant replenishment period policy leads to a higher total cost.