Jonas C. P. Yu

A deteriorating inventory model with a temporary price discount

Abstract Inventory models considering a temporary price discount have recently become an active area of research. In this study, an extension is made to consider the fact that some commodities may deteriorate during storage. The models also incorporate three additional assumptions that have been neglected by researchers. Two models for the exponentially deteriorating items with a temporary price discount are developed for a regular and non-regular inventory replenishment time. Our goal in this research is to maximize the total cost saving during the temporary price discount order cycle. A numerical example is provided to illustrate the theory.

An inventory model for ameliorating and deteriorating items taking account of time value of money and finite planning horizon

The objective of this study is to develop an optimal replenishment inventory strategy to consider both ameliorating and deteriorating effects taking account of time value of money and finite planning horizon. The amelioration rate and the deterioration rate are assumed to follow a Weibull distribution. The inventory system is particularly useful for young livestock whose utility increase over time. The discounted cash flow and optimisation technique are used to derive an optimal solution. A numerical example and sensitivity analysis are given to illustrate the theory of the inventory system.

Coordination-based inventory management for deteriorating items in a two-echelon supply chain with profit sharing

This study develops a model for inventory management consisting of a two-echelon supply chain (SC) with profit sharing and deteriorating items. The retailer and the supplier act as the leader and follower, in which the supplier faces a huge setup cost and economic order quantity ordering strategy. The market demand is affected by the sale price of the product, and the inventory has a deterioration rate following a Weibull distribution. The retailer executes three profit-sharing mechanisms to motivate the supplier to participate in SC optimisation and to extend the life cycle of the product. A search algorithm is developed to determine the solutions as using the profit-sharing mechanisms. The outcomes from numerical experiments demonstrate the profitability of the proposed model.

An efficient replenishment model of deteriorating items for a supplier–buyer partnership in hi-tech industry

Due to rapid technological innovation and global competitiveness, the selling price of products in hi-tech industries usually declines significantly with time. This study develops a deteriorating inventory model for the product experiencing continuous decrease in unit price. This inventory model, from the perspective of supplier, proposes an efficient replenishment policy for a single-supplier-and-single-buyer supply chain in which the buyer conducts JIT through a realisation of multiple deliveries and the supplier performs one-time production. The objective of this model is, on the basis of the buyers economic ordering decisions, to maximise the suppliers profit during a finite planning horizon and then to determine the optimal production cycle and product life cycle. A simple heuristic algorithm is developed to derive the optimal solution for the model. Numerical examples and sensitivity analyses confirm the performances of the proposed model and reveal some interesting managerial implications.

An integrated production-inventory model for deteriorating items with imperfect quality and shortage backordering considerations

In this study we present a production-inventory model for deteriorating item with vendor-buyer integration. A periodic delivery policy for a vendor and a production-inventory model with imperfect quality for a buyer are established. Such implicit assumptions (deteriorating items, imperfect quality) are reasonable in view of the fact that poor-quality items do exist during production. Defective items are picked up during the screening process. Shortages are completely backordered. The study shows that our model is a generalization of the models in current literatures. An algorithm and numerical analysis are given to illustrate the proposed solution procedure. Computational results indicate that our model leads to a more realistic result.

OPTIMAL DETERIORATING ITEMS INVENTORY MODEL WITH A THREE-ECHELON SUPPLY CHAIN STRATEGIC ALLIANCE

This study develops a mathematical inventory model for deteriorating item taking into account a vertical integration of a three-echelon supply chain (one supplier, one distributor, and one retailer) through strategic alliances. The objective is to minimize the joint total relevant cost for the integrated inventory model. A simple but efficient heuristic technique is used to derive the optimal solution. A numerical example and sensitivity analysis on the optimal results are presented to validate the results of the proposed integrated model. The proposed mathematical model has demonstrated how an integrated approach to decision making can achieve a global optimum and outperform three typically individual models (i.e., independent model, dominant suppliers model and dominant retailers model).

THE EFFECTS OF INFLATION AND TIME VALUE OF MONEY ON A PRODUCTION MODEL WITH A RANDOM PRODUCT LIFE CYCLE

This paper extends Moon and Lees EOQ model to consider a production system with a time-value of money and inflation under a random life cycle. Two conditions are discussed: the first is when the product life cycle ends in the production stage and the second is when the product life cycle ends in the non-production stage. We develop an algorithm to find the optimal period time and the lowest expected total cost. Numerical examples and sensitivity analyses are given to validate the results of the production model.

A joint economic production lot size model for a deteriorating item with decreasing warehouse rental overtime

In real life, the capacity of any distributors warehouse is limited. Excess stock must be held in a rented warehouse whenever the capacity of the distributors own warehouse is insufficient. Furthermore, we also choose to store in the rented warehouse if it has better facilities and/or a lower cost. In this paper, we consider a single-producer-single-distributor inventory model with deteriorating items in a two-warehouse environment. The rented warehouse normally has better facilities for preservation as compared with ones own warehouse. Besides, there is an incentive offered by a rented warehouse that allows the rental fee to decrease over time. The incentive mechanism can be proved to perform better than the one without incentive. The object of this study is to develop an optimal joint economic lot size (JELS) policy from the perspectives of the producer and the distributor. Moreover, a criterion to consider the length of time of rented warehouse usage is proposed. Simulated Annealing (SA) method has been developed to find the global optimum for a complex cost surface through stochastic search process. A computer program in C-language has been developed for this purpose and is implemented to derive the optimum decision for the decision maker. Numerical examples and sensitivity analyses are given to illustrate the results.

Optimal ordering and recovery policy for reusable items with shortages

This study considers inventory of reusable items with shortages and develops a replenishing and production policy to satisfy customer need, and to promote the smart use of resources. Distinct from former researches, our study considers reusable items with shortages to derive the best replenishment and production strategy. A hybrid of numerical analysis and search method is used to derive the minimum total cost of the mathematical model. The result is compared with the case when no shortage is allowed.

Managing dual warehouses with an incentive policy for deteriorating items

Distributors in a supply chain usually limit their own warehouse in finite capacity for cost reduction and excess stock is held in a rent warehouse. In this study, we examine inventory control for deteriorating items in a two-warehouse setting. Assuming that there is an incentive offered by a rent warehouse that allows the rental fee to decrease over time, the objective of this study is to maximise the joint profit of the manufacturer and the distributor. An optimisation procedure is developed to derive the optimal joint economic lot size policy. Several criteria are identified to select the most appropriate warehouse configuration and inventory policy on the basis of storage duration of materials in a rent warehouse. Sensitivity analysis is done to examine the results of model robustness. The proposed model enables a manufacturer with a channel distributor to coordinate the use of alternative warehouses, and to maximise the joint profit of the manufacturer and the distributor.