Optimal Inventory Policy For Deteriorating Items With Time-dependent Demand

The research of inventory control gained a great progress since the classical EOQ inventory model was proposed in 1915. However, there is a large gap between the theo-retical research results and the practical application, it still has a lot of defects to improve in the future. In circulation of commodities market, the phenomenon of deteriorating cannot be ignored for most of commodities, which seriously affects the overall profit of the manufacturers and retailers. Therefore, the further research of the inventory control theory and methods for deteriorating items is very necessary so as to improve the perfor-mance of enterprises. This paper extended the study of the inventory control problems with deteriorating items on the basis of the existing inventory optimization theory, along with the actual market demand, the market life of product and payment contract. The content of the paper is given as follows:(1) According to different deterioration properties of the items and the actual de-mand, this paper established an inventory model of deteriorating items with ramp-type demand rate and the deterioration rate subject to a mixed exponential distribution. An optimal procedure was constructed to propose the replenishment strategy and optimal order quantity so as to minimize the total cost of the inventory system.(2) According to the market life of deteriorating items and the complex market de-mand, this paper established an inventory model of deteriorating items with trapezoidal-type demand rate, pre-sale strategy and the market life of items subject to an exponential distribution. The retailer’s optimal order strategy to minimize the total cost of the inven-tory system was proposed, and how the perturbations of the parameters influenced the retailer’s order and the total cost of inventory system was proposed.(3) Jointing the general type of trapezoidal-demand, deterioration and shortage, this paper established an inventory model of deteriorating item with partial backlogging and deterioration rate subject to a Weibull distribution. By analyzing the model, an opti-mal order strategy was proposed to minimize the total cost of inventory system, and the sensitivity analysis of the parameters was also provided to assess the solution procedure.(4) According to the fact that customers are sensitive to the price and the stock of items, this paper established an inventory model for deteriorating items with price-and stock-dependent demand rate. By analyzing the proposed inventory model, this paper proved that the solution of the inventory model existed uniquely with constraint conditions. An optimal pricing and ordering strategy was proposed to minimize the total system profits and the sensitivity of the main parameters of the inventory model was provided.(5) In order to promote the circulation of the items, suppliers often use delay pay-ment policy to encourage retailers to increase the order quantity. This paper considered an inventory model for deteriorating items with price- and stock-dependent demand rate under the permissible delay in payment. The optimal pricing and ordering strategy was proposed to maximize the total profit, and the impact of the main parameters on the proposed inventory strategy was discussed.In a word, based on the literature and the related enterprise research, this paper studied inventory strategies of deteriorating items under complicated demand envi-ronment by discussing the ordering, pricing and the inventory cycle of the inventory system. Through studying such actual inventory strategy problem, it not only enriches the present inventory theory but also provides a theoretical basis to make inventory decisions for the manager of the enterprises.