Volume 2 Issue 3 pp. 449-466 Summer, 2011


Optimal production strategy for deteriorating items with varying demand pattern under inflation


Ibraheem Abdul and Atsuo Murata


This paper presents production-inventory models for deteriorating items with increasing-steady-decreasing demand pattern under the effect of inflation and time value of money. This type of demand behavior can be observed in some fashion products or seasonal products in general. Shortages are allowed with partial backlogging of demand and a two-parameter Weibull-distribution function is used for the deterioration of items in order to make the models more generalized and realistic. The models generate optimal values of initial production run time, onset of shortages, production recommencement time, and total production quantity that minimizes the total relevant costs of production and inventory for any given set of system parameters. Various possible production strategies available for items with variable demand pattern are examined to determine the optimal production strategy. The discounted cash flow approach and trust region optimization methods are used to obtain the optimal results. The Numerical examples and sensitivity analysis show that the optimal production strategy may vary with changes in system parameters.


DOI: 10.5267/j.ijiec.2011.04.002

Keywords: Production, Inventory, Varying demand pattern, Weibull deterioration, Partial backlogging, Inflation
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