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A Note on Dave's Inventory Model for Deteriorating Items

Author(s): S. Rengarajan and M. N. Vartak


Source: The Journal of the Operational Research Society, Vol. 34, No. 6 (Jun., 1983), pp.
543-546
Published by: Palgrave Macmillan Journals on behalf of the Operational Research Society
Stable URL: http://www.jstor.org/stable/2581130
Accessed: 14-12-2016 09:06 UTC

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J. Opl Res. Soc. Vol. 34, No. 6, pp. 543-546, 1983 0160-5682/83/060543-04S03.00/0
Printed in Great Britain. All rights reserved Copyright ? 1983 Operational Research Society Ltd

A Note on Dave's Inventory Model for


Deteriorating Items
S. RENGARAJAN and M. N. VARTAK
Indian Institute of Technology, Bombay

In this paper an attempt has been made to generalise Dave's results on an invento
deteriorating items. He has derived the results for optimal order level and lot size
deterministic constant demand throughout the scheduling period. Here, a variable kno
taken to show that the optimality conditions for the optimal initial stock do not depen
of the demand. A numerical example is used to illustrate the analysis.

INTRODUCTION

Recently, Dave1 has considered an inventory model for deteriorating ite


is treated as a discrete variable. He has derived the formulae for opt
lot size, considering a deterministic demand throughout the schedul
have tried to generalise the above inventory model for time depen
rigorous analysis is followed here to calculate the average invento
numerical example from Dave's paper is used to show that the averag
is less when the new formulae are used. It is also surprising to no
conditions obtained for optimal initial stock do not depend upon the nat
pattern.

MODEL

The following assumptions are made to develop the model.

1. A finite scheduling period of total duration [0, T] (T, a positive integer


T sub-intervals of unit duration each.
2. The demand is Rj units (Rj > 0) is the7th sub-interval (y = 1,2,... ,T) and occurs
the end of the y th sub-interval.
3. Rate of replenishment is infinite and there is no lead time. Fixed lot size Q raises the
inventory at the beginning of the scheduling period to stock level S0.
4. Shortages are'made up as soon as the fresh lot arrives.
5. The deteriorated items in the inventory are neither repaired nor replaced.
6. C is the cost per unit items, the inventory carrying cost is Q/unit/unit time and the
shortage cost is C2/unit/unit time, and these are supposed to be known and consta
during the scheduling period.
7. A constant fraction 6 of the on hand inventory deteriorates per unit time.

The system starts with the inventory level of S0 and this amount is reduced by th
demand and deterioration. The inventory level comes to zero at time t = tx and the
demands occurring after the time tx are backlogged and are fulfilled by a new procuremen
Since every time the order quantity Q should raise the initial inventory level to S0,

<2=s0 + Z *, (1)
j=ti + i

Let Si be the inventory level at time point / = 0, 1, 2,.. . ,T. As we said earlier, at time
/
i == tx, S( = 0
i.e.

sh = o
543

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Journal of the Operational Research Society Vol. 34, No. 6

But

St = St . ? 9St _! ? Rt
i.e.

^(l-^Vi"^,
i.e.

s - *"
Similarly we can write

^/i -2 - 71 ^2 "?" ^ n
(1-0)2 l
9 ? ^'1I, ^'i-l
'I 'I-' , I^/,-2
in
(i-ey (i-9f i-e

s _ *.. , *.,-? , , *.
0 (i-e)" (i-e)''-1 1-0
The total number of units that deteriorate during sched
0(So + Sl + S2 + ... + S,l_l)

D(ti) = efj(R,iv-orj)
r-i j=\

Since C is the cost of the material, the average cost per u


CD(tt)
(2)
T -

The average inventory carrying cost per unit time is calculated as follows:

',(',) = l(S0 + 2St + 2S2 + ... + 2S? _, + S?)

= ^ + sl + s2 + ... + s,i_l

'. =^iRj\-erj+i(Rl'i(\-0)-j)
The average inventory carrying cost per unit time is

c,/,(/,)
(3)

The calculation of average shortage cost per unit time runs as follows:
The average quantity short in tx + lth sub-interval is R,l + l/2. Thus R[[ + l units are
carried as a shortage for the next (T ? t{ ? 1) time units; similarly for the shortages arising
in the later sub-intervals.
Hence the average shortage cost per unit time is

yfi 1 *,+ t W-j)} (4)


The total average cost per unit time K(t\) is

KU + -^-+^\- E Rj+ I RjiT-j)


T T T {2J=l[ + i ,, = /| + i
544

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S. Rengarajan and M. N. Vartak?Dave's Inventory Model

i.e.

*w=fi(?i(i-f)-')
T
-2

+ i<2 I *y+ I *j(T-j)\ (5)


Since ^ is an integer, the optimal value of tx should sa

K(t\+\)-K(t\>0 (6)
K(t\-\)-K(t?x)>0 (7)
where t?x is the optimal value of tx.
Using (5) in the conditions (6) and (7)

^f1 { t (1 - erJ(Ce + Ci) + (1 - 0)-<'. + '/c0 +y)

+ c2/,-^-c2(r-
and

j fl (i - ^(ce + c,) + (i - 0)-'/ce + ^) + c2u - ^ - c2rj < o


i.e.

^i\ i ^ . C2
Uio-eyJice + cj + ii-er^+^cd+^-j+c^-^-QiT-v^
and

T
U'zV-e^ (9)
since all /?,- > 0.
The conditions (8) and (9) are independent of Rj and hold good for any Rj. The result
obtained here is surprising since the optimal value of tx, and hence the initial stock value,
is not at all affected by the nature of Rj.
The optimality conditions (8) and (9) simplify to

M(tx-\)<^^M(tx)
where

^ + ^[(l-^)^ + 1>-l]-g;(l-^^ + ^
M(tl) = ~ 2{r-(/1 + i)} + i "'
NUMERICAL EXAMPLE

The following example is taken from Dave's1 paper and illustrates the a
in this section.

R = 200 units/day, C = RS 80/unit, C, = Re 1/unit/day,

C2 = RS 9/unit/day, 7=12 days and 0 = 0.05


545

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Journal of the Operational Research Society Vol. 34, No. 6

The value of?= 0.375.


T
The values of M{tx) for /, = 1,2,... ,7 ... are
0.0406, 0.0704, 0.1086, 0.1588, 0.2266, 0.3218, 0.4627 .. .

Here 0.375 lies between M(6) and Af (7) so that the optimal value t?{ = 7.
The average minimum cost per day is calculated from the formula

C, c\f(l-0> -4-1
*('?) = * 0T T

c2(r-/?)2
Cx [(I-O)tT-I +
6t\ 2" 2r

= /ts4581.50

and

50= 1728 units


Q = 2728 units
D{tx) = 328 units.

The minimum average cost per unit time obtained by this method (Rs4581.50)
than the cost value (Rs4768.18) given by Dave.1

REFERENCE

1 U. Dave (1979) On a discrete in time order level inventory model for deteriorating items
349-354.

546

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