THE OPTIMAL CYCLE TIME FOR DETERIORATING ITEMS WITH LIMITED STORAGE CAPACITY UNDER PERMISSIBLE DELAY IN PAYMENTS

Kun-Jen Chung and Tien-Shou Huang ()
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Kun-Jen Chung: Graduate School of Management, Chung Yuan Christian University, Chung Li, Taiwan, ROC
Tien-Shou Huang: Department of Information Management, National Kaohsiung University of Applied Science, Kaohsiung, Taiwan 807, ROC

Asia-Pacific Journal of Operational Research (APJOR), 2006, vol. 23, issue 03, 347-370

Abstract: Inventory models with deteriorating items have received considerable attention in recent years. In considering the deteriorating inventory with permissible delay in payments, most researchers pay attention to a single warehouse. Under conditions of permissible delay in payments, this paper develops a model to determine the optimal cycle time for a single deteriorating item that is stored in two different warehouses. A rented warehouse (RW) is used to store the excess units over the fixed capacityWof the owned warehouse (OW). The rented warehouse is assumed to charge higher unit holding cost than the OW. In this paper, we propose a two-warehouse inventory model for deteriorating items under permissible delay in payments. It is assumed that the deterioration rate in RW is the same as in OW, and the holding cost in RW is greater than that in OW. The stocks of RW are transported to OW in continuous release pattern and the transportation cost is ignored. Three theorems are developed to determine the optimal cycle time and numerical examples are given to illustrate these theorems.

Keywords: Cost–benefit analysis; EOQ; inventory; deteriorating items; permissible delay in payments (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (4)

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DOI: 10.1142/S0217595906000814

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