Substantial literature has been written over the years on the subject of deteriorating inventory, but little attention has been directed to the price-dependent demand of items that have a varying rate of deterioration. In this study an optimal replenishment policy is formulated for items with a linear price function of demand. A variable proportion of the items will deteriorate per time-unit while they are in storage and shortages of items are completely backordered. It is shown that the presented model is a generalization of the current models in the literature. An algorithm is developed to maximize net profit.
No takes yet. Share an insight, caveat, or question.
Hui‐Ming Wee (1997) studied this question.