Affiliation:
1. Department of Statistics, University of Calcutta, India
Abstract
In this article, we study a periodic review inventory model for non-instantaneous deteriorating items when the length of a reorder cycle is known and the rate of deterioration is time dependent. In order to stimulate demand within the customers, the inventory manager offers a temporary discount on the selling price in three different stages—(a) before the items start to decay, (b) after deterioration sets in and (c) during shortage. The optimum ordering policy and the discounts to be given are determined so as to maximize the total expected profit over a reorder interval. Numerical examples are cited to illustrate the model. Sensitivity analysis is also carried out to study the effect of change in the model parameters on the optimal policy. AMS subject classification: 90