DETERIORATING INVENTORY SYSTEM WITH VARYING HOLDING COST IN DEMAND DECLINING MARKET

Abstract

An EOQ model is derived to study optimal ordering policy for deteriorating items, when demand is declining with respect to time. Inventory holding cost is a continuous function of order quantity. Shortages are allowed and some shortages are partially backlogged. Backlogging rate is defined as function of time. Here objective is to minimize the total cost of an inventory system. The model is supported by a numerical example and sensitivity analysis with respect to different parameter is given.