An EOQ Model with Time-Dependent Demand and Holding Cost Under the Effect of Inspection on Deterioration Rate

Abstract

This paper presents an inventory system for deteriorating products taking into account the effect of the number of inspections at the time of replenishment on the average rate of deterioration. In the real world, some products’ deterioration rate may be affected by other adjacent products. Therefore, the effect of deteriorated products can be reduced by removing them from other items through complete inspection. The product’s demand is taken as a linear function of time. Two holding cost scenarios are suggested. Holding cost is constant in the first scenario and time-dependent in the second. The average deterioration rate depends on each product’s rate of deterioration and the number of inspections. The total average cost of the seller is constructed under two different functions of holding cost. The major goal of this work is to obtain the optimal number of inspections and cycle time to reduce the total cost of the seller. The model is illustrated numerically and a sensitivity analysis is performed to determine the impact of different parameter values.