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Production inventory model with deteriorating items, two rates of production cost and taking account of time value of money

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  • This paper presents production-inventory model for deteriorating items with constant demand under the effect of inflation and time-value of money. Models are developed without shortages while using two production cost functions. In the first case, production cost is divided into two parts: an initial cost which occurs at the beginning of each cycle and is applied to the entire quantity produced during the cycle and a running cost that is incurred as production progresses and is applied to the initial units produced. In the second case, the production cost is incurred at the beginning of the cycle. Numerical examples are given to illustrate the theoretical results and made the sensitivity analysis of parameters on the optimal solutions. The validation of this model's result was coded in Microsoft Visual Basic 6.0
    Mathematics Subject Classification: Primary: 90B05, 90B30; Secondary: 90C46.


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