Inventory Model with Different Deterioration Rates with Stock and Price Dependent Demand under Time Varying Holding Cost and Shortages

International Journal of Mathematics and Statistics Invention (IJMSI)
E-ISSN: 2321 – 4767 P-ISSN: 2321 - 4759
www.ijmsi.org Volume 3 Issue 8 || December. 2015 || PP-01-14
www.ijmsi.org 1 | Page
Inventory Model with Different Deterioration Rates with Stock
and Price Dependent Demand under Time Varying Holding Cost
and Shortages
S.R. Sheikh1
and Raman Patel2
1
Department of Statistics, V.B. Shah Institute of Management, Amroli, Surat
2
Department of Statistics, Veer Narmad South Gujarat University, Surat
ABSTRACT: An inventory model for deteriorating items with stock and price dependent demand is developed.
Holding cost is considered as function of time. Shortages are allowed and completely backlogged. Numerical
example is provided to illustrate the model and sensitivity analysis is also carried out for parameters.
KEY WORDS: Inventory model, Deterioration, Price dependent demand, Stock dependent demand, Time
varying holding cost, Shortages
I. INTRODUCTION
In real life, deterioration of items is a general phenomenon for many inventory systems and therefore
deterioration effect cannot be ignored. Many researchers have studied EOQ models for deteriorating items in
past. Ghare and Schrader [2] considered no-shortage inventory model with constant rate of deterioration. The
model was extended by Covert and Philip [1] by considering variable rate of deterioration. By considering
shortages, the model was further extended by Shah and Jaiswal [14]. The related work are found in (Nahmias
[9], Raffat [12], Goyal and Giri [3], Ouyang et al. [10], Wu et al. [16]).
Hill [4] considered inventory model with ramp type demand rate. Mandal and Pal [6] developed
inventory model with ramp type demand with shortages. Hung [5] considered inventory model with arbitrary
demand and arbitrary deterioration rate. Salameh and Jaber [13] developed a model to determine the total profit
per unit of time and the economic order quantity for a product purchased from the supplier. Mukhopadhyay et
al. [8] developed an inventory model for deteriorating items with a price-dependent demand rate. The rate of
deterioration was taken to be time-proportional and a power law form of the price-dependence of demand was
considered. Teng and Chang [15] considered the economic production quantity model for deteriorating items
with stock level and selling price dependent demand. Mathew [7] developed an inventory model for
deteriorating items with mixture of Weibull rate of decay and demand as function of both selling price and time.
Patel and Parekh [11] developed an inventory model with stock dependent demand under shortages and variable
selling price.
Inventory models for non-instantaneous deteriorating items have been an object of study for a long
time. Generally the products are such that there is no deterioration initially. After certain time deterioration
starts and again after certain time the rate of deterioration increases with time. Here we have used such a
concept and developed the deteriorating items inventory models.
In this paper we have developed an inventory model with stock and price dependent demand with
different deterioration rates for the cycle time. Shortages are allowed and completely backlogged. To illustrate
the model, numerical example is taken and sensitivity analysis for major parameters on the optimal solutions is
also carried out.
II. ASSUMPTIONS AND NOTATIONS
The following notations are used for the development of the model:
NOTATIONS:
D(t) : Demand rate is a linear function of price and inventory level (a + bI(t) - ρp, a>0, 0<b<1, ρ>0)
A : Replenishment cost per order
c : Purchasing cost per unit
p : Selling price per unit
T : Length of inventory cycle
I(t) : Inventory level at any instant of time t, 0 ≤ t ≤ T
Q1 : Order quantity intially

Inventory Model with Different Deterioration Rates…
Q2 : Shortages of quantity
Q : Order quantity
θ : Deterioration rate during μ1 ≤ t ≤ μ2, 0< θ <1
θt : Deterioration rate during , μ2 ≤ t ≤ T, 0< θ <1
c2 : Shortage cost per unit item
π : Total relevant profit per unit time.
ASSUMPTIONS:
The following assumptions are considered for the development of the model.
 The demand of the product is declining as a function of price and inventory level.
 Replenishment rate is infinite and instantaneous.
 Lead time is zero.
 Shortages are permitted and completely backlogged.
 Deteriorated units neither be repaired nor replaced during the cycle time.
III. THE MATHEMATICAL MODEL AND ANALYSIS
Let I(t) be the inventory at time t (0 ≤ t ≤ T) as shown in figure.
Figure 1
The differential equations which describes the instantaneous states of I(t) over the period (0, T) are given by :
dI(t)
= - (a + bI(t) - ρp),
dt
1
0 t μ  (1)
dI(t)
+ θI(t) = - (a + bI(t) - ρp),
dt
1 2
μ t μ  (2)
dI(t)
+ θtI(t) = - (a + bI(t) - ρp),
dt
2 0
μ t t  (3)
dI(t)
= - (a + bI(t) - ρp),
dt
0
t t T  (4)
with initial conditions I(0) = Q1, I(μ1) = S1, I(t0) = 0, and I(T) = -Q2.
Solutions of these equations are given by
2 2 2 2
1
1 1
I(t) = Q (1 - b t) - (at + b t -ρ p t - ρ b p t - ab t + ρ b p t ),
2 2
(5)
           
           
   
2 2 2 2
1 1 1 1
1 1
2 2 2 2
1 1 1 1
1 1
a μ - t - ρ p μ - t + a θ + b μ - t - ρ p θ + b μ - t
2 2I(t) = + S 1 + θ + b μ - t
- a θ + b t μ - t + ρ p θ + b t μ - t - ab θ t μ - t + ρ p b θ t μ - t
 
 
   
 
 
(6)
               
           
2 2 2 2 3 3 3 3
0 0 0 0 0 0 0 0
3 3 3 3 2 2 2 2 2 2 2 2
0 0 0 0 0 0
1 1 1 1
a t -t -ρ p t -t + ab t -t - ρ p b t -t + aθ t -t - ρ p θ t -t -ab t t -t + b ρ p t t -t
2 2 6 6
I(t) =
1 1 1 1 1 1
- ab θ t t -t + ρ b p θ t t -t - aθ t t -t + ρ p θ t t -t + ρ b p θ t t -t - ab θ t t -t
6 6 2 2 4 4
 
 
 
 
  
(7)
           
2 2 2 2
0 0 0 0 0 0
1 1
I(t) = a t - t - ρp t - t + ab t - t - ρpb t - t - abt t - t + b ρpt t - t .
2 2
 
 
 
(8)

(by neglecting higher powers of θ)
From equation (5), putting t = μ1, we have
   
2 2 2 21
1 1 1 1 1 1 1
1 1
S 1 1 1
Q = + aμ - ρ p μ + b μ - b ρ p μ - ab μ + ρ b p μ .
1 - b μ 1 - b μ 2 2
 
 
 
(9)
From equations (6) and (7), putting t = μ2, we have
           
           
   
2 2 2 2
1 2 1 2 1 2 1 2
2 1 1 2
2 2 2 2
2 1 2 2 1 2 2 1 2 2 1 2
1 1
a μ -μ -ρ p μ -μ + a θ + b μ -μ - ρ p θ + b μ - μ
2 2I(μ ) = + S 1 + θ + b μ -μ
-a θ + b μ μ -μ + ρ p θ + b μ μ -μ -ab θ μ μ -μ + b ρ θ p μ μ -μ
 
 
   
 
 
(10)
           
         
 
2 2 2 2 3 3 3 3
0 2 0 2 0 2 0 2 0 2 0 2
3 3 3 3 2
2 2 0 2 2 0 2 2 0 2 2 0 2 2 0 2
2
2 0 2
1 1 1 1
a t - μ - ρ p t - μ + a b t - μ - ρ b p t - μ + a θ t - μ - ρ θ p t - μ
2 2 6 6
1 1 1
I(μ ) = - a b μ t - μ + b ρ p μ t - μ - a b θ μ t - μ + ρ b θ p μ t - μ - a θ μ t - μ
6 6 2
1 1
+ ρ θ p μ t - μ + ρ
2 4
   2 2 2 2 2 2
2 0 2 2 0 2
.
1
b θ p μ t - μ - a b θ μ t - μ
4
 
 
 
 
 
 
 
  
(11)
So from equations (10) and (11), we get
   
           
         
1
1 2
2 2 2 2 3 3 3 3
0 2 0 2 0 2 0 2 0 2 0 2
3 3 3 3 2
2 0 2 2 0 2 2 0 2 2 0 2 2 0 2
1
S =
1 + θ + b μ - μ
1 1 1 1
a t - μ - ρ p t - μ + a b t - μ - ρ b p t - μ + a θ t - μ - ρ θ p t - μ
2 2 6 6
1 1 1
- a b μ t - μ + b ρ p μ t - μ - a b θ μ t - μ + ρ b θ p μ t - μ - a θ μ t - μ
6 6 2
1
+ ρ
2
  
             
               
2 2 2 2 2 2 2 2 2
2 0 2 2 0 2 2 0 2 1 2 1 2 1 2
2 2 2 2 2 2
1 2 2 1 2 2 1 2 2 1 2 2 1 2
.
1 1 1
θ p μ t -μ + ρ b θ p μ t -μ - a b θ μ t -μ -a μ -μ + ρ p μ -μ - a θ + b μ -μ
4 4 2
1
+ ρ p θ + b μ -μ + a θ + b μ μ -μ -ρ p θ + b μ μ -μ + a b θ μ μ -μ -b ρ θ p μ μ -μ
2
 
 
 
 
 
 
 
 
 
 
 
(12)
Putting value of S1 from equation (12) into equation (9), we have
     
             
         
1
1 1 2
2 2 2 2 3 3 3 3
0 2 0 2 0 2 0 2 0 2 0 2 2 0 2
3 3 3 3 2 2
2 0 2 2 0 2 2 0 2 2 0 2 2 0 2
2 2
2 0
1
Q =
1 - b μ 1 + θ + b μ - μ
1 1 1 1
a t -μ -ρ p t -μ + ab t -μ - ρ b p t -μ + aθ t -μ - ρ θ p t -μ -ab μ t -μ
2 2 6 6
1 1 1 1
+ b ρ p μ t - μ - ab θ μ t - μ + ρ b θ p μ t - μ - a θ μ t -μ + ρ θ p μ t -μ
6 6 2 2
1
+ ρ b θ p μ t -μ
4
  
               
           
2 2 2 2 2 2 2 2
2 2 0 2 1 2 1 2 1 2 1 2
2 2 2 2
2 1 2 2 1 2 2 1 2 2 1 2
2 2 2
1 1 1 1 1
1 1 1
- ab θ μ t -μ -a μ -μ + ρ p μ -μ - a θ + b μ -μ + ρ p θ + b μ -μ
4 2 2
+ a θ + b μ μ - μ - ρ p θ + b μ μ - μ + ab θ μ μ - μ - b ρ θ p μ μ - μ
1 1
aμ - ρ p μ + b μ + b ρ p μ - ab μ
2 2
+
 
 
 
 
 
 
 
 
 
  


 1
.
1 - b μ

 

(13)
Putting t = T in equation (8), we have
           
2 2 2 2
2 0 0 0 0 0 0
1 1
Q = a T - t - ρp T - t + ab T - t - ρpb T - t - abT T - t + b ρpT T - t .
2 2
 
 
 
. (14)
Using (13) in (5), we have

     
             
       
1 1 2
2 2 2 2 3 3 3 3
0 2 0 2 0 2 0 2 0 2 0 2 2 0 2
3 3 3 3 2
2 0 2 2 0 2 2 0 2 2 0 2
(1 -b t)
I(t) =
1 - b μ 1 + θ + b μ - μ
1 1 1 1
a t -μ -ρ p t -μ + ab t -μ - ρ b p t -μ + aθ t -μ - ρ θ p t - μ - ab μ t - μ
2 2 6 6
1 1 1 1
+ b ρ p μ t - μ - ab θ μ t - μ + ρ b θ p μ t - μ - a θ μ t - μ + ρ θ p μ
6 6 2 2
  
 
               
           
2
2 0 2
2 2 2 2 2 2 2 2 2 2
2 0 2 2 0 2 1 2 1 2 1 2 1 2
2 2 2 2
2 1 2 2 1 2 2 1 2 2 1 2
1 1 1
t - μ
1 1 1 1
+ ρ b θ p μ t -μ - ab θ μ t -μ -a μ -μ + ρ p μ -μ - a θ + b μ -μ + ρ p θ + b μ -μ
4 4 2 2
1
(1 -b t) aμ - ρ p μ + b μ
2
+
 
 
 
 
 
 
 
 
 
  
 
2 2 2
1 1
2 2 2
1
1
+ b ρ p μ - ab μ
1 12
- at + b t - ρ p t + ρ b p t + ab t
1 - b μ 2 2
 
 
  
 
 
(15)
Based on the assumptions and descriptions of the model, the total relevant profit (π), include the following
elements:
(i) Ordering cost (OC) = A (16)
(ii)
0t
0
H C = (x + yt)I(t)d t
01 2
1 2
tμ μ
0 μ μ
= (x + yt)I(t)d t + (x + yt)I(t)d t + (x + yt)I(t)d t  
 
             
2 2 3 3 6
0 0 0 0 0 0 0 0
1 1
1 2
2 2 2 2 3 3 3 3
0 2 0 2 0 2 0 2 0 2 0 2 2 0 2
1 1 1 1 1 5 5
= x at - ρ p t + ab t - ρ b p t + aθ t - ρ θ p t t + y ab θ - ρ b p t
2 2 6 6 6 1 2 1 2
aμ - ρ p μ
1
1 + (θ + b ) μ - μ
1 1 1 1
2 2 6 6
+ x
+
   
   
   
  
         
           
           
3 3 3 3 2 2
2 0 2 2 0 2 2 0 2 2 0 2 2 0 2
2 2 2 2 2 2 2 2
2 0 2 2 0 2 1 2 1 2 1 2
2 2
1 2 2 1 2 2 1 2
1 1 1 1
+ b ρ p μ t - μ - ab θ μ t -μ + ρ b θ p μ t - μ - aθ μ t -μ + ρ θ p μ t -μ
6 6 2 2
1 1 1
+ ρ b θ p μ t - μ - ab θ μ t - μ - a μ - μ + ρ p μ - μ - a θ + b μ - μ
4 4 2
1
+ ρ p θ + b μ -μ + a θ + b μ μ -μ -ρ p θ + b μ μ -μ + ab θ
2
   
 
2
2 2 2 2
2 1 2 2 1 2
2 2
1 1 1
μ
μ μ -μ -b ρ θ p μ μ -μ
1 1
1 + (θ + b )μ + a(θ + b )μ - ρ p (θ + b )μ
2 2
 
 
  
  
  
   
   
   
   
   
   
   
   
   
   
   
  
  
  
  
   
             
         
1 1
1 2
2 2 2 2 3 3 3 3
0 2 0 2 0 2 0 2 0 2 0 2 2 0 2
3 3 3 3 2 2
2 0 2 2 0 2 2 0 2 2 0 2 2 0 2
2
2
aμ - ρ p μ
1
+
1 + θ + b μ - μ
1 1 1 1
2 2 6 6
1 1 1 1
+ b ρ p μ t - μ - ab θ μ t - μ + ρ b θ p μ t - μ - a θ μ t -μ + ρ θ p μ t -μ- x
6 6 2 2
1
+ ρ b θ p μ
4
  
               
           
 
2 2 2 2 2 2 2 2 2
0 2 2 0 2 1 2 1 2 1 2 1 2
2 2 2 2
2 1 2 2 1 2 2 1 2 2 1 2
2 2
1 1 1
1 1 1
t -μ - ab θ μ t -μ -a μ -μ + ρ p μ -μ - a θ + b μ -μ + ρ p θ + b μ -μ
4 2 2
1 1
1 + θ + b μ + a(θ + b )μ - ρ p (θ + b )μ
2 2
 
 
 
 
 
 
 
 
 
  
 

 
1
μ
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

2 2
0 0 0 0
3
2
3 3
0 0 0 0
2
0 0
1 1 1 1 1 1
x - ρ b p + ρ θ p t + ρ b θ p t + ab - aθ t - ab θ t
2 2 4 2 2 41
- μ
3 1 1
+ y -a + ρ p + ρ b θ p t - ab t + ρ b p t - ab θ t
6 6
1 1 1 1 1 1 1
- x aθ - ρ θ p + y - ρ b p + ρ θ p t + ρ b θ p t + ab -
4 3 3 2 2 4 2
  
  
  
  
  
  
 
 
 
2 4
0 0 2
5
2
3 3 2 2 3 3 2
0 0 0 0 0 0 0 0 0 0 0
1 1
aθ t - ab θ t μ
2 4
1 5 5 1 1
- x ab θ - ρ b θ p + y aθ - ρ θ p μ
5 1 2 1 2 3 3
1 1 1 1 1 1 1
+ x -a+ ρ p + ρ b θ p t -ab t + ρ b p t - ab θ t + y at -ρ p t + ab t - ρ b p t + aθ t - ρ θ t t
2 6 6 2 2 6 6
-
  
  
  
    
    
    
    
    
    
     
4
1
1 1 1
x ab θ - ρ b θ p + y a θ + b - ρ p θ + b μ
4 2 2
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
   
   
 
 
   
   
             
       
1 2
2 2 2 2 3 3 3 3
0 2 0 2 0 2 0 2 0 2 0 2 2 0 2
3 3 3 3 2
2 0 2 2 0 2 2 0 2 2 0 2
1 1
x a θ + b - ρ p θ + b
2 2
1
-a +
1 + θ + b μ - μ
1 1 1 1
2 2 6 6
1
1 1 1 1-
+ b ρ p μ t - μ - ab θ μ t - μ + ρ b θ p μ t - μ - a θ μ t -μ + ρ3
6 6 2 2+ y
 
 
 
  
 
               
           
     
2
2 0 2
2 2 2 2 2 2 2 2 2 2
2 0 2 2 0 2 1 2 1 2 1 2 1 2
2 2 2 2
2 1 2 2 1 2 2 1 2 2 1 2
1
θ p μ t -μ
1 1 1 1
4 4 2 2
-θ - b - a θ + b μ + ρ p θ + b μ
 
 
 
 
 
 
 
 
 
  
3
1
2 2
1 1 1
μ
- ab θ μ + ρ b θ p μ + ρ p
 
 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
  
/
   
             
         
1 2
2 2 2 2 3 3 3 3
0 2 0 2 0 2 0 2 0 2 0 2 2 0 2
3 3 3 3 2 2
2 0 2 2 0 2 2 0 2 2 0 2 2 0 2
1
-a +
1 + θ + b μ - μ
1 1 1 1
a t -μ - ρ p t - μ + ab t - μ - ρ b p t -μ + aθ t -μ - ρ θ p t -μ -ab μ t -μ
2 2 6 6
1 1 1 1
+ b ρ p μ t - μ - ab θ μ t - μ + ρ b θ p μ t -μ - aθ μ t -μ + ρ θ p μ t - μ1
6 6 2 2- x
2 1
+ ρ b θ p μ
4
  
               
           
     
2 2 2 2 2 2 2 2 2 2
2 0 2 2 0 2 1 2 1 2 1 2 1 2
2 2 2 2
2 1 2 2 1 2 2 1 2 2 1 2
2
1 1 1 1
1 1 1
4 2 2
-θ -b - a θ + b μ + ρ p θ + b μ - ab θ μ + ρ b θ p μ
 
 
 
 
 
 
 
 
 
  
2
+ ρ p
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
  

   
             
         
1 1
1 2
2 2 2 2 3 3 3 3
0 2 0 2 0 2 0 2 0 2 0 2 2 0 2
3 3 3 3 2 2
2 0 2 2 0 2 2 0 2 2 0 2 2 0 2
1
aμ - ρ p μ +
1 + θ + b μ - μ
1 1 1 1
a t -μ -ρ p t -μ + ab t -μ - ρ b p t -μ + aθ t -μ - ρ θ p t - μ -a b μ t -μ
2 2 6 6
1 1 1 1
+ b ρ p μ t - μ - ab θ μ t - μ + ρ b θ p μ t - μ - aθ μ t -μ + ρ θ p μ t -μ
6 6 2 21
- y
12 + ρ b θ p μ
4
  
               
           
     
2 2 2 2 2 2 2 2 2 2
2 0 2 2 0 2 1 2 1 2 1 2 1 2
2 2 2 2
2 1 2 2 1 2 2 1 2 2 1 2
2 2
1 1 1
1 1 1
4 2 2
1 1
1 + θ + b μ + a θ + b μ - ρ p θ + b μ
2 2

 
 
 
 
 
 
 
 
 
  
 
 
 

2
1
μ
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
2 2
0 0 0 0
3 5
0 0
3 3
0 0
1 1 1 1 1 1
x - ρ b p + ρ θ p t + ρ b θ p t + ab - aθ t - ab θ t
2 2 4 2 2 41 1 5 5 1 1
+ t + x ab θ - ρ b θ p + y aθ - ρ θ p t
3 5 1 2 1 2 3 31 1
+ y -a + ρ p + ρ b θ p T - ab t + ρ b p t - ab θ T
6 6
1 1 1
+ x aθ - ρ θ p
4 3 3
  
  
       
    
        
  
  



2 2 4
0 0 0 0 0
1 1 1 1 1 1
+ y - ρ b p + ρ θ p t + ρ b θ p t + ab - aθ t - ab θ t t
2 2 4 2 2 4
   
   
   
     
             
       
1 1 2
2 2 2 2 3 3 3 3
0 2 0 2 0 2 0 2 0 2 0 2 2 0 2
3 3 3 3 2
2 0 2 2 0 2 2 0 2 2 0 2
1
1 - b μ 1 + θ + b μ - μ
1 1 1 1
a t - μ - ρ p t - μ + ab t - μ - ρ b p t - μ + a θ t - μ - ρ θ p t - μ - ab μ t - μ
2 2 6 6
1 1 1 1
+ b ρ p μ t - μ - ab θ μ t - μ + ρ b θ p μ t - μ - a θ μ t - μ +
6 6 2
+ x
  
 
           
               
2
2 0 2
2 2 2 2 2 2 2 2
2 0 2 2 0 2 1 2 1 2 1 2
2 2 2 2 2 2
1 2 2 1 2 2 1 2 2 1 2 2 1 2
ρ θ p μ t - μ
2
1 1 1
+ ρ b θ p μ t - μ - ab θ μ t - μ - a μ - μ + ρ p μ - μ - a θ + b μ - μ
4 4 2
1
+ ρ p θ + b μ - μ + a θ + b μ μ - μ - ρ p θ + b μ μ - μ + ab θ μ μ - μ - b ρ θ p μ μ - μ
2
 
 
 
 
 
 
 
 
 

 
 
1
2 2 2
1 1 1 1 1
1
μ
1 1
aμ - ρ p μ + b μ + ρ b p μ - ab μ
2 2+
1 - b μ
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
         
   
       
4 5
1 2
4
2
1 2
2 2 2 2
0 2 0 2 0 2 0 2
1 1 1 1
+ y - b - ρ b p + ab μ + y ab θ - ρ b θ p μ
4 2 2 5
1 1 1 1 1 1
+ x ab θ - ρ b θ p + y a θ + b - ρ p θ + b μ + x a θ + b - ρ p θ + b
4 2 2 3 2 2
1
-a +
1 + θ + b μ - μ
1 1 1
a t -μ -ρ p t -μ + ab t -μ - ρ b p t -μ +
2 2
+ y
 
 
 
      
      
      
  
       
           
               
3 3 3 3
0 2 0 2 2 0 2 2 0 2
3 3 3 3 2 2 2 2 2 2 2 2
2 0 2 2 0 2 2 0 2 2 0 2 2 0 2 2 0 2
2 2 2 2
1 2 1 2 1 2 1 2 2 1 2
1
aθ t -μ - ρ θ p t -μ -ab μ t -μ + b ρ p μ t -μ
6 6
1 1 1 1 1 1
- ab θ μ t -μ + ρ b θ p μ t -μ - aθ μ t -μ + ρ θ p μ t -μ + ρ b θ p μ t -μ - ab θ μ t -μ
6 6 2 2 4 4
1 1
-a μ -μ + ρ p μ -μ - a θ + b μ -μ + ρ p θ + b μ - μ + a θ + b μ μ - μ -
2 2
   
   
     
2 1 2
2 2 2 2
2 1 2 2 1 2
2 2
1 1 1 1
ρ p θ + b μ μ - μ
+ ab θ μ μ - μ - b ρ θ p μ μ - μ
- θ -b - a θ + b μ + ρ p θ + b μ - ab θ μ + ρ b θ p μ + ρ p
 
 
 
 
 
 
 
 
  
  
  
   
   
   
   
   
   
   
   
   
   
 
 
 
  
3
2
μ




   
             
         
1 2
2 2 2 2 3 3 3 3
0 2 0 2 0 2 0 2 0 2 0 2 2 0 2
3 3 3 3 2 2
2 0 2 2 0 2 2 0 2 2 0 2 2 0 2
2
2 0
1
-a +
1 + θ + b μ - μ
1 1 1 1
a t -μ -ρ p t - μ + a b t -μ - ρ b p t -μ + a θ t -μ - ρ θ p t -μ -a b μ t -μ
2 2 6 6
1 1 1 1
+ b ρ p μ t - μ - a b θ μ t - μ + ρ b θ p μ t -μ - a θ μ t - μ + ρ θ p μ t - μ
1 6 6 2 2
+ x
2 1
+ ρ b θ p μ t
4
  
           
               
     
2 2 2 2 2 2 2
2 2 0 2 1 2 1 2 1 2
2 2 2 2 2 2
1 2 2 1 2 2 1 2 2 1 2 2 1 2
2 2
1 1 1 1
1 1
- μ - a b θ μ t - μ - a μ - μ + ρ p μ - μ - a θ + b μ - μ
4 2
1
+ ρ p θ + b μ -μ + a θ + b μ μ -μ -ρ p θ + b μ μ -μ + a b θ μ μ -μ -b ρ θ p μ μ -μ
2
-θ -b - a θ + b μ + ρ p θ + b μ - a b θ μ + ρ b θ p μ +
 
 
 
 
 
 
 
 
 
 
 
2
2
μ
ρ p
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
   
             
       
1 1
1 2
2 2 2 2 3 3 3 3
0 2 0 2 0 2 0 2 0 2 0 2 2 0 2
3 3 3 3 2 2
2 0 2 2 0 2 2 0 2 2 0 2 2 0
1
aμ - ρ p μ +
1 + θ + b μ - μ
1 1 1 1
a t - μ - ρ p t - μ + ab t -μ - ρ b p t -μ + aθ t -μ - ρ θ p t -μ -ab μ t -μ
2 2 6 6
1 1 1 1
+ b ρ p μ t - μ - ab θ μ t -μ + ρ b θ p μ t -μ - aθ μ t - μ + ρ θ p μ t - μ1
6 6 2 2+ y
2
  
 
               
           
      
2
2 2 2 2 2 2 2 2 2 2
2 0 2 2 0 2 1 2 1 2 1 2 1 2
2 2 2 2
2 1 2 2 1 2 2 1 2 2 1 2
2 2
1 1 1
1 1 1 1
4 4 2 2
1 1
1 + a θ + b μ + a θ + b μ - ρ p θ + b μ
2 2
 
 
 
 
 
 
 
 
 
 
2
2
μ
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
     
             
       
1 1 2
2 2 2 2 3 3 3 3
0 2 0 2 0 2 0 2 0 2 0 2 2 0 2
3 3 3 3 2
2 0 2 2 0 2 2 0 2 2 0 2
1 1
x - b - ρ b p + ab
2 2
1
-
1 -b μ 1 + θ + b μ - μ
1 1 1 1
a t - μ - ρ p t -μ + ab t - μ - ρ b p t -μ + aθ t -μ - ρ θ p t -μ -ab μ t -μ
2 2 6 6
1
1 1 1+
+ b ρ p μ t -μ - ab θ μ t -μ + ρ b θ p μ t - μ - aθ μ t - μ3
6 6 2+ y b
 
 
 
  
 
               
           
2
2 0 2
2 2 2 2 2 2 2 2 2 2
2 0 2 2 0 2 1 2 1 2 1 2 1 2
2 2 2 2
2 1 2 2 1 2 2 1 2 2 1 2
1
+ ρ θ p μ t - μ
2
1 1 1 1
4 4 2 2
  
  
  
  
  
  
  
  
  
  
 
3
1
2 2 2
1 1 1 1 1
1
μ
1 1
b aμ - ρ p μ + b μ + ρ b p μ - ab μ
2 2
- - a + ρ p
1 -b μ
 
 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
   
   
   
  
  
     
             
         
1 1 2
2 2 2 2 3 3 3 3
0 2 0 2 0 2 0 2 0 2 0 2 2 0 2
3 3 3 3 2 2
2 0 2 2 0 2 2 0 2 2 0 2 2 0 2
1
-
1 -b μ 1 + θ + b μ - μ
1 1 1 1
a t -μ -ρ p t -μ + ab t -μ - ρ b p t -μ + aθ t - μ - ρ θ p t - μ - ab μ t - μ
2 2 6 6
1 1 1 1
+ b ρ p μ t - μ - ab θ μ t - μ + ρ b θ p μ t -μ - aθ μ t -μ + ρ θ p μ t - μ1
6 6 2 2+ x b
2 1
+ ρ b
4
  
               
           
2 2 2 2 2 2 2 2 2 2
2 0 2 2 0 2 1 2 1 2 1 2 1 2
2 2 2 2
2 1 2 2 1 2 2 1 2 2 1 2
1 1
1 1 1
θ p μ t -μ - ab θ μ t -μ -a μ -μ + ρ p μ -μ - a θ + b μ -μ + ρ p θ + b μ -μ
4 2 2
1
b aμ - ρ p μ +
2
-
  
  
  
  
  
  
  
  
   
  
 
2 2 2
1 1 1
1
1
b μ + ρ b p μ - ab μ
2
- a + ρ p
1 -b μ
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
   
   
   
  
  

     
             
         
1 1 2
2 2 2 2 3 3 3 3
0 2 0 2 0 2 0 2 0 2 0 2 2 0 2
3 3 3 3 2 2
2 0 2 2 0 2 2 0 2 2 0 2 2 0 2
2
1
1 -b μ 1 + θ + b μ - μ
1 1 1 1
a t -μ -ρ p t -μ + ab t -μ - ρ b p t -μ + aθ t - μ - ρ θ p t - μ - ab μ t - μ
2 2 6 6
1 1 1 1
+ b ρ p μ t - μ - ab θ μ t - μ + ρ b θ p μ t -μ - aθ μ t -μ + ρ θ p μ t -μ
6 6 2 21 a
+ y
12
+ ρ b θ p μ
4
  
               
           
 
2 2 2 2 2 2 2 2 2 2
0 2 2 0 2 1 2 1 2 1 2 1 2
2 2 2 2
2 1 2 2 1 2 2 1 2 2 1 2
2 2 2
1 1 1 1 1
1
1 1 1
4 2 2
1 1
aμ - ρ p μ + b μ + ρ b p μ - ab μ
2 2
+
1 -b μ
 
 
 
 
 
 
 
 
 
 
2
1
μ
 
 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
6 2 2 3 3
2 0 0 0 0 0 0 2
3 3 2 2 3 3 2
0 0 0 0 0 0 0 0 0 0 2
1 5 5 1 1 1 1
- y ab θ - ρ b θ p μ - x at - ρ p t + ab t - ρ b p t + aθ t - ρ θ t μ
6 1 2 1 2 2 2 6 6
1 1 1 1 1 1 1 1
- x -a+ ρ p + ρ b θ p t -ab t + ρ b p t - ab θ t + y at -ρ p t + ab t - ρ b p t + aθ t - ρ θ t μ -
2 6 6 2 2 6 6 5
   
   
   
    
    
    
 
5
1
y ab θ -ρ b θ p μ
( 17)
(by neglecting higher powers of θ)
(iii)
2
1 2
μ T
μ μ
D C = c θ I(t)dt + θ tI(t)dt
 
 
 
 
 
   
   
2 2 2 3 2 3
1 2 2 1 2 2 1 2 2 1 2 2
2 3 2 3 2 2 4 2 2 4
1 2 2 1 2 2 1 2 2 1 2 2
1 1 1 1 1 1
a μ μ - μ - ρ p μ μ - μ + a θ + b μ μ - μ - ρ p θ + b μ μ - μ
2 2 2 3 2 3
1 1 1 1 1 1 1 1
-a θ + b μ μ - μ + ρ p θ + b μ μ - μ -ab θ μ μ - μ + ρ p b θ μ μ - μ
2 3 2 3 2 4 2 4
= cθ
       
       
       
       
       
       
 
           
     
   
1 2
2 2 2 2 3 3 3 3
0 2 0 2 0 2 0 2 0 2 0 2
3 2 3 2 2
2 0 2 2 0 2 2 0 2 2 0 2 2 0 2
2 2 2 2
2 0 2 2 0 2
1
+
1 + θ + b (μ -μ )
1 1 1 1
a t -μ -ρ p t -μ + ab t - μ - ρ b p t - μ + aθ t - μ - ρ θ p t -μ
2 2 6 6
1 1 1
-ab μ (t -μ )+ b ρ p μ (t -μ )- ab θ μ t - μ + ρ b θ p μ t -μ - aθ μ t -μ
6 6 2
1 1 1
+ ρ θ p μ t -μ + ρ b θ p μ t - μ - ab
2 4 4
 
           
   
 
2 2 2
2 0 2 0 2 0 2
2 2 2 2
1 2 1 2 2 1 2 2 1 2
2 2 2 2
2 1 2 2 1 2
2
2 1 2 2
θ μ t - μ -a(t -μ )+ ρ p (t -μ )
1 1
- a θ + b μ -μ + ρ p θ + b μ -μ + a θ + b μ (μ -μ )-ρ p θ + b μ (μ -μ )
2 2
+ ab θ μ μ - μ - ρ b θ p μ μ - μ
1
μ + θ + b μ μ - μ
2











  
  
  
 
 
 
 
 
 
 
 
 
 
 
  
  
  














 
 
 
 
 
 
 
 
 
 
 
 
 
 


   
 
           
2 2 3 3 4 4
1 1 1 1 1 1
1 2
2 2 2 2 3 3 3 3
0 2 0 2 0 2 0 2 0 2 0 2
2 1 2 2 1 2
1 1 1 1 1 1
aμ - ρ p μ + a θ + b μ - ρ p θ + b μ - ab θ μ + ρ b θ p μ
2 2 6 6 4 4
1
1 + θ + b (μ -μ )
1 1 1 1
a t -μ - ρ p t -μ + ab t - μ - ρ b p t - μ + aθ t - μ - ρ θ p t - μ
2 2 6 6
1
- ab μ (μ -μ ) + b ρ p μ (μ -μ ) -
6
- cθ +
     
     
           
3 3 3 3 2
2 0 2 2 0 2 2 0 2
2 2 2 2 2 2 2
2 0 2 2 0 2 2 0 2 1 2 1 2
2 2 2 2
1 2 1 2 2 1 2 2 1 2
1 1
ab θ μ t - μ + ρ b θ p μ t - μ - aθ μ t -μ
6 2
1 1 1
+ ρ θ p μ t -μ + ρ b θ p μ t - μ - ab θ μ t - μ - a( μ -μ ) + ρ p (μ -μ )
2 4 4
1 1
- a θ + b μ - μ + ρ p θ + b μ - μ + a θ + b μ (μ -μ ) - ρ p θ + b μ (μ -μ )
2 2
+    
 
2 2 2 2
2 1 2 2 1 2
2
1 1
ab θ μ μ - μ - ρ b θ p μ μ - μ
1
μ + θ + b μ
2
 
 
 
  
  
  
   
   
   
   
   
   
   
   
   
   
   
   
       
 
  
  
  
6 5 2 2 4
0 0 0 0 0 0 0
3 3 3 2 2 2 3
0 0 0 0 0 0 0 0 0 0 0
1 5 5 1 1 1 1 1 1 1 1 1 1
ab θ - ρ b θ p t + aθ - ρ θ p t + - ρ b p + ρ θ p t + ρ b θ p t + ab - aθ t - ab θ t t
6 1 2 1 2 5 3 3 4 2 2 4 2 2 4
+ cθ
1 1 1 1 1 1 1 1
+ -a+ ρ p + ρ b θ p t -ab t + ρ b p t - ab θ t t + at -ρ p t + ab t - ρ b p t + aθ t - ρ θ p t
3 6 6 2 2 2 6 6
     
     
     
 
 
 
2
0
6 5 2 2 4
2 2 0 0 0 0 2
3 3 3 2
0 0 0 0 2 0 0 0
t
1 5 5 1 1 1 1 1 1 1 1 1 1
ab θ - ρ b θ p μ + aθ - ρ θ p μ + - ρ b p + ρ θ p t + ρ b θ p t + ab - aθ t - ab θ t μ
6 1 2 1 2 5 3 3 4 2 2 4 2 2 4
-cθ
1 1 1 1 1 1
+ -a+ ρ p + ρ b θ p t -ab t + ρ b p t - ab θ t μ + at -ρ p t + ab t -
3 6 6 2 2
 
 
 
  
  
  
     
     
     
 
 
 
2 2 3 2
0 0 0 2
1 1
ρ b p t + aθ t - ρ θ p t μ
2 6 6
 
 
 
  
  
  
(18)
(iv) Shortage cost (SC) is given by
0
T
2
t
S C = - c I(t)d t
 
 
 
 

     
       
3 3 2 2
0 0 0 0
2
2 2
0 0 0 0 0 0 0 0
1 1 1 1
ab - ρ b p T - t + - a + ρ p - ab t + ρ b p t T - t
3 2 2 2
= - c
1 1
+ at T - t - ρ p t T - t + ab t T - t - ρ b p t T - t
2 2
  
  
  
 
 
 
(19)
(v)
T
0
S R = p (a+ b I(t) - ρ p )d t
 
 
 

01 2
1 2 0
tμ μ T
0 μ μ t
= p (a+ bI(t) - ρp)dt + (a+ bI(t) - ρp)dt + (a+ bI(t) - ρp)dt + (a+ bI(t) - ρp)dt
 
 
 
 
   

    
       
   
     
1 1 2
2 2 2 2
0 2 0 2 0 2 0 2
3 3 3 3
0 2 0 2 2 0 2 2 0 2
3 3 3 3 2
2 0 2 2 0 2 2 0 2
1
1
1 -b μ 1 + θ + b (μ -μ )
1 1
a t -μ - ρ p t -μ + ab t - μ - ρ b p t - μ
2 2
1 1
+ aθ t - μ - ρ θ p t - μ - ab μ (t -μ ) + b ρ p μ (t -μ )
6 6
1 1 1 1
- ab θ μ t - μ + ρ b θ p μ t - μ - aθ μ t -μ + ρ
6 6 2 2
aμ + b
= p
 
   
         
     
2
2 0 2
2 2 2 2 2 2
2 0 2 2 0 2 1 2 1 2
2 2 2 2
1 2 1 2 2 1 2
2 2 2 2
2 1 2 2 1 2 2 1 2
θ p μ t -μ
1 1
+ ρ b θ p μ t - μ - ab θ μ t - μ - a(μ -μ ) + ρ p (μ -μ )
4 4
1 1
- a θ + b μ - μ + ρ p θ + b μ - μ + a θ + b μ (μ -μ )
2 2
- ρ p θ + b μ (μ -μ ) + ab θ μ μ - μ - ρ b θ p μ μ - μ
 
 
 
 











 
2
1 1
2 2 2 2
1 1 1 1 1 1 1
1
2 3 2 3 3
1 1 1 1 1
1
μ - b μ
2
1 1 1 1
+ aμ - ρ p μ + b μ + ρ b p μ - ab μ μ - b μ
(1 -b μ ) 2 2 2
1 1 1 1 1
- aμ - b μ + ρ p μ - ρ b p μ + ab μ
2 6 2 6 3




 
  
  
  
  
  
  
  
  
 
 
 
 
 
 
 
 
 
 
  
  
   
   
   

1
-ρ p μ
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
 
 
 
   
 
2 2 2 3
1 2 2 1 2 2 1 2 2
2 3 2 3
1 2 2 1 2 2
2 3 2 2 4 2
1 2 2 1 2 2 1
2
1 1 1 1
a μ μ - μ - ρ p μ μ - μ + a θ + b μ μ - μ
2 2 2 3
1 1 1 1
- ρ p θ + b μ μ - μ - a θ + b μ μ - μ
2 3 2 3
1 1 1 1 1
+ ρ p θ + b μ μ - μ - ab θ μ μ - μ + ρ p b θ μ
2 3 2 4 2
aμ + b
+ p
     
     
     
   
   
   
   
   
   
 
       
   
     
2 4
2 2
1 2
2 2 2 2
0 2 0 2 0 2 0 2
3 3 3 3
0 2 0 2 2 0 2 2 0 2
3 2 3 2 2
2 0 2 2 0 2 2 0 2
1
μ - μ
4
1
+
1 + θ + b (μ -μ )
1 1
2 2
1 1
+ aθ t - μ - ρ θ p t - μ - ab μ (t -μ ) + b ρ p μ (t -μ )
6 6
1 1 1
- ab θ μ t - μ + ρ b θ p μ t - μ - aθ μ t -μ +
6 6 2
 
 
 
 
   
         
     
2
2 0 2
2 2 2 2 2 2
2 0 2 2 0 2 0 2 0 2
2 2 2 2
1 2 1 2 2 1 2
2 2 2 2
2 1 2 2 1 2 2 1 2
1
ρ θ p μ t -μ
2
1 1
+ ρ b θ p μ t - μ - ab θ μ t - μ - a(t -μ ) + ρ p (t -μ )
4 4
1 1
2 2
- ρ p θ + b μ (μ -μ ) + ab θ μ μ - μ - ρ b θ p μ μ - μ
 















 
2
2 1 2 2
2
1
μ + θ + b μ μ - μ
2
- ρ p μ
  
  
  
  
  
  
  
  
  
  
  
  
  
  
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
     
         


 

































   
  
       
   
2 2 3 3 4 4
1 1 1 1 1 1
1 2
2 2 2 2
0 2 0 2 0 2 0 2
3 3 3 3
0 2 0 2 2 0 2 2 0
1
1 1 1 1 1 1
aμ - ρ p μ + a θ + b μ - ρ p θ + b μ - ab θ μ + ρ b θ p μ
2 2 6 6 4 4
1
+
1 + θ + b (μ -μ )
1 1
2 2
1 1
+ aθ t - μ - ρ θ p t - μ - ab μ (t -μ ) + b ρ p μ (t -μ
6 6
aμ + b
- p
       
   
         
 
2
3 2 3 2 2 2
2 0 2 2 0 2 2 0 2 2 0 2
2 2 2 2 2 2
2 0 2 2 0 2 0 2 0 2
2 2 2 2
1 2 1 2 2 1 2
2
)
1 1 1 1
- ab θ μ t - μ + ρ b θ p μ t - μ - aθ μ t -μ + ρ θ p μ t -μ
6 6 2 2
1 1
+ ρ b θ p μ t - μ - ab θ μ t - μ - a(t -μ ) + ρ p (t -μ )
4 4
1 1
2 2
- ρ p θ + b μ (μ    
 
2 2 2 2
1 2 2 1 2 2 1 2
2
1 1
1
-μ ) + ab θ μ μ - μ - ρ b θ p μ μ - μ
1
μ + θ + b μ
2
- ρ p μ
  
  
  
  
  
  
  
  
    
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
    
   










 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

2 2 3 3 4
0 0 0 0 0
0 0
4 5 5
0 0 0
2 2 2 3
0 2 2 0 2 2 0 2 2
2
1 1 1 1 1
at - ρ p t + ab t - ρ b p t + aθ t
2 2 6 6 1 2
+ p at + b - ρ p t
1 1 1
ρ θ p t - ab θ t + ρ b θ p t
1 2 1 2 1 2
1 1 1 1
a t μ - μ - ρ p t μ - μ + ab t μ - μ
2 2 2 3
-
- p aμ + b
  
  
  
  
  
  
     
     
     
2 3 3 4 3 4
0 2 2 0 2 2 0 2 2
2 3 2 3 3 2 5
0 2 2 0 2 2 0 2 2
3 2 5
0 2 2
1 1 1 1 1 1
ρ b p t μ - μ + aθ t μ - μ - ρ θ p t μ - μ
2 3 6 4 6 4
1 1 1 1 1 1 1
- ab t μ - μ + b ρ p t μ - μ - ab θ t μ - μ
2 3 2 3 6 2 5
1 1 1 1 1
+ ρ b θ p t μ - μ - aθ
6 2 5 2 3
     
     
     
     
     
     
 
 
 
2
3 4 3 4
0 2 2 0 2 2
2 3 5 2 3 5
0 2 2 0 2 2
-ρ p μ
1 1 1 1
t μ - μ + ρ θ p t μ - μ
4 2 3 4
1 1 1 1 1 1
+ ρ b θ p t μ - μ - ab θ t μ - μ
4 3 5 4 3 5
  
  
  
  
  
  
  
  
  
  
   
     
     
  
     
     
     
2 2 2 3
0 0 0
2 3 2 3 2 3
0 0 0
2
0 0
1 1 1 1
T t - T - ρ p T t - T + ab t T - T
2 2 2 3
+ p aT + b - ρ p T
1 1 1 1 1 1
- ρ b p t T - T - ab t T - T + ρ b p t T - T
2 3 2 3 2 3
1 1
- p at + b at - ρ p
2 2
       
       
       
       
        
       
2 3 3
0 0 0 0
1 1
t + ab t - ρ b p t - ρ p t
6 6
  
  
  
(20)
The total profit during a cycle, π(t0,T,p) consisted of the following:
 0
1
π (t ,T ,p ) = S R - O C - H C - D C - S C
T
(21)
Substituting values from equations (16) to (20) in equation (21), we get total profit per unit. Putting µ1= v1t0 and
µ2=v2t0 in equation (21), we get profit in terms of t0, T and p. Differentiating equation (21) with respect to t0, T
and p and equate it to zero, we have

i.e. 0 0 0
0
π(t ,T ,p ) π(t ,T ,p ) π(t ,T ,p )
= 0 , = 0 , = 0
t T p
  
  
(22)
provided it satisfies the condition
2 2 2
0 0 0
2
0 00
2 2 2
0 0 0
2
0
2 2 2
0 0 0
2
0
π (t ,T ,p ) π (t ,T ,p ) π (t ,T ,p )
t T t pt
π (t ,T ,p ) π (t ,T ,p ) π (t ,T ,p )
> 0
T t T pT
π (t ,T ,p ) π (t ,T ,p ) π (t ,T ,p )
p t p T p
  
 
  
 
  
  
(23)
IV. NUMERICAL EXAMPLE
Considering A= Rs.100, a = 500, b=0.05, c=Rs. 25, ρ= 5, θ=0.05, x = Rs. 5, y=0.05, v1 = 0.30, v2 = 0.50, c2 =
Rs. 8, in appropriate units. The optimal values of t0* = 0.4505, T* =0.5808, p* = 50.5313, and Profit*= Rs.
12162.9820.
The second order conditions given in equation (23) are also satisfied. The graphical representation of
the concavity of the profit function is also given.
t0 and Profit T and Profit p and Profit
Graph 1
Graph 2 Graph 3
V. SENSITIVITY ANALYSIS
On the basis of the data given in example above we have studied the sensitivity analysis by changing
the following parameters one at a time and keeping the rest fixed.
Table 1
Sensitivity Analysis
Parameter % t0 T p Profit
a
+20% 0.4569 0.5629 60.5423 17655.9523
+10% 0.4526 0.5700 55.5345 14782.9921
-10% 0.4516 0.5965 45.5333 9795.8726
-20% 0.4567 0.6184 40.5414 7681.6778
x
+20% 0.3794 0.5246 50.5201 12123.7579
+10% 0.4115 0.5496 50.5246 12142.1646
-10% 0.4991 0.6206 50.5412 12186.8211
-20% 0.5628 0.6735 50.5564 12214.5794
θ
+20% 0.4397 0.5707 50.5240 12159.4220
+10% 0.4465 0.5776 50.5297 12161.2015
-10% 0.4546 0.5841 50.5330 12164.7889
-20% 0.4589 0.5875 50.5348 12133.6245

A
+20% 0.4913 0.6344 50.5805 12130.3498
+10% 0.4714 0.6082 50.5565 12146.3045
-10% 0.4285 0.5519 50.5048 12180.4949
-20% 0.4050 0.5212 50.4767 12198.9846
ρ
+20% 0.4165 0.5584 42.1586 10063.9856
+10% 0.4313 0.5679 45.9632 11017.7569
-10% 0.4748 0.5967 56.1179 13563.7951
-20% 0.5122 0.6245 63.1107 15316.7190
c2
+20% 0.4565 0.5709 50.5498 12197.9785
+10% 0.4537 0.5756 50.5411 12160.3310
-10% 0.4455 0.5849 50.5195 12165.9827
-20% 0.4404 0.5907 50.5074 12169.4242
From the table we observe that as parameter a increases/ decreases average total profit and optimum
order quantity also increases/ decreases.
Also, we observe that with increase and decrease in the value of θ, x and ρ, there is corresponding
decrease/ increase in total profit and optimum order quantity.
From the table we observe that as parameter A increases/ decreases average total profit decreases/
increases and optimum order quantity increases/ decreases.
VI. CONCLUSION
In this paper, we have developed an inventory model for deteriorating items with price and inventory
dependent demand with different deterioration rates. Sensitivity with respect to parameters have been carried
out. The results show that with the increase/ decrease in the parameter values there is corresponding increase/
decrease in the value of profit.
REFERENCES
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Industrial Engineering Transactions, Vol. 5, pp. 323-328.
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[3] Goyal, S.K. and Giri, B. (2001): Recent trends in modeling of deteriorating inventory; Euro. J. Oper. Res., Vol. 134, pp. 1-16.
[4] Hill, R.M. (1995): Inventory models for increasing demand followed by level demand; J. Oper. Res. Soc., Vol. 46, No. 10, pp.
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price and time; International J. of Scientific and Research Publication, Vol. 3(7), pp. 1-8.
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inventory; Computers and Industrial Engineering, Vol. 47, pp. 339-349.
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permissible delay in payments; Computers and Industrial Engineering, Vol. 51, pp. 637-651.
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selling price, International J. Latest Technology in Engg. Mgt. Applied Sci., Vol. 3, No. 9, pp. 6-20.
[12] Raafat, F. (1991): Survey of literature on continuously deteriorating inventory model, Euro. J. of O.R. Soc., Vol. 42, pp. 27-37.
[13] Salameh, M.K. and Jaber, M.Y. (2000): Economic production quantity model for items with imperfect quality; J. Production
Eco., Vol. 64, pp. 59-64.
[14] Shah, Y.K. and Jaiswal, M.C. (1977): An order level inventory model for a system with constant rate of deterioration; Opsearch;
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[15] Teng, J.T. and Chang, H.T. (2005): Economic production quantity model for deteriorating items with price and stock dependent
demand; Computers and Oper. Res., Vol. 32, pp. 279-308.
[16] Wu, K.S., Ouyang, L. Y. and Yang, C.T. (2006): An optimal replenishment policy for non-instantaneous deteriorating items with
stock dependent demand and partial backlogging; International J. of Production Economics, Vol. 101, pp. 369-384.

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