Most of the items managed by a retailer are perishable and have a limited shelf life. The longer they are stored, the more their value decrease, where the holding cost is directly proportional to the value of the goods and deterioration is time proportional. If there is a shortage, it will be resolved backorder. The supplier allows payments within a certain period of time. This paper will try to combine and modify some basic inventory models to develop a model for deterioration items that have expiry date with varying holding cost to time where deterioration is time proportional, under the conditions of backlogging and allowing delays in payments. The model solution is carried out with an optimization approach based on the parameters that affect the model. The approximate optimal solution has been obtained. Numerical examples are given at the end of this paper to illustrate the model settlement algorithms.
Keywords
Inventory model, deteriorating items, backlogging, time-varying holding cost, permissible delay in payments