An Interdisciplinary Journal

* 2006, Vol.9, No.1, pp.43-52*

A deterministic inventory model over an infinite
time-horizon is developed for a deteriorating item with shortages,
taking the demand rate at any instant to be a function of the
on-hand inventory (stock level) at that instant. To make it more
realistic, the effects of inflation and time value of money are
introduced. Two separate inflation rates: namely, the internal
(company) and the external (general economy) are taken into
account. Numerical examples of the results are considered for a
given data set. Also the sensitivity analysis of the model is
examined for changes in the parameters.

*Key words: *
inventory, deterioration, stock-dependent demand,
shortage, inflation, time-discounting

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Last updated: *April 25, 2006*