Joint inspection and inventory control for deteriorating items with random maximum lifetime
Allen H. Tai,
Wanhua He and
International Journal of Production Economics, 2019, vol. 207, issue C, 144-162
In this paper, we consider inventory control problems for deteriorating items. Six practical models are developed for an inventory system with deterioration rate depending on the maximum lifetime of items. Due to the physical nature of items, the maximum lifetime of items is assumed to be random over a time period. Items exceeding the maximum lifetime are regarded as scarp and no longer serviceable. Two replenishment policies: (i) quantity-based policy and (ii) time-based policy, and two inspection scenarios: (i) one inspection and (ii) continuous monitoring have been discussed in these models. Examples and sensitivity analysis are given for each model. The results indicate that it may be beneficial for the inventory holder to adopt the quantity-based policy and drop the plan of continuous monitoring if the cost of continuous monitoring is too high. Otherwise, performing continuous monitoring is able to increase the optimal long-run average profit. These results provide useful insights for inventory holder in making managerial decisions.
Keywords: Deteriorating items; Replenishment policy; Inspection policy; Random maximum lifetime; Inventory system (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:207:y:2019:i:c:p:144-162
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