Profit maximization in an inventory system with time-varying demand, partial backordering and discrete inventory cycle

Luis A. San-José (), Joaquín Sicilia (), Manuel González- de-la-Rosa () and Jaime Febles-Acosta ()
Additional contact information
Luis A. San-José: Universidad de Valladolid
Joaquín Sicilia: Universidad de La Laguna
Manuel González- de-la-Rosa: Universidad de La Laguna
Jaime Febles-Acosta: Universidad de La Laguna

Annals of Operations Research, 2022, vol. 316, issue 2, No 3, 763-783

Abstract: Abstract In this paper, an inventory problem where the inventory cycle must be an integer multiple of a known basic period is considered. Furthermore, the demand rate in each basic period is a power time-dependent function. Shortages are allowed but, taking necessities or interests of the customers into account, only a fixed proportion of the demand during the stock-out period is satisfied with the arrival of the next replenishment. The costs related to the management of the inventory system are the ordering cost, the purchasing cost, the holding cost, the backordering cost and the lost sale cost. The problem is to determine the best inventory policy that maximizes the profit per unit time, which is the difference between the income obtained from the sales of the product and the sum of the previous costs. The modeling of the inventory problem leads to an integer nonlinear mathematical programming problem. To solve this problem, a new and efficient algorithm to calculate the optimal inventory cycle and the economic order quantity is proposed. Numerical examples are presented to illustrate how the algorithm works to determine the best inventory policies. A sensitivity analysis of the optimal policy with respect to some parameters of the inventory system is developed. Finally, conclusions and suggestions for future research lines are given.

Keywords: EOQ inventory models; Discrete-time cycle; Time-varying demand; Partial backordering (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://link.springer.com/10.1007/s10479-021-04161-6 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:annopr:v:316:y:2022:i:2:d:10.1007_s10479-021-04161-6

Ordering information: This journal article can be ordered from
http://www.springer.com/journal/10479

DOI: 10.1007/s10479-021-04161-6

Access Statistics for this article

Annals of Operations Research is currently edited by Endre Boros

More articles in Annals of Operations Research from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().