Economic order quantity model for Pareto distributed decaying products with quadratic demand, shortage and salvage value

Uttam Kumar Sharma, Varun Mohan, S. Sindhuja and Pervaiz Iqbal

International Journal of Mathematics in Operational Research, 2024, vol. 27, issue 4, 479-495

Abstract: At the present time, estimating demand and deterioration for some products becomes difficult because these key components of any economic order quantity (EOQ) model become dependent on price, freshness level and many other factors. On the other hand, rising competition does not allow managers to dispose of deteriorated items. In this paper, we incorporated salvage value parameter in the EOQ model with quadratic time dependent demand and Pareto distributed deterioration. Also, the stock out condition is allowed and completely backlogged. With these axioms' expressions for total inventory cost, inventory cycle time and lot size value are derived and optimised. Proposed model findings are described with the help of numerical example. Sensitivity analysis supports the relevance of salvage value parameter, i.e., rise in salvage value reduces the total inventory cost.

Keywords: deterioration; variable demand; salvage value; variable holding cost. (search for similar items in EconPapers)
Date: 2024
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