Economic ordering model for deteriorating items with random demand and deterioration

Abstract

In modern marketplaces, competitive products frequently face volatile demand. In particular, the majority of deteriorating items are frequently subject to dual uncertainty, simultaneously suffering from demand and deterioration. Accordingly, this study attempts to develop an economic ordering model for a newsboy-style deteriorating item with lognormal demand and Poisson-type deterioration. Finally, an effective and practical economic ordering model involving deteriorating inventory is developed for optimising the order quantity of a given deteriorating item during an upcoming selling period to maximise expected profits of retailers. Numerical examples demonstrate that, as expected, the proposed economic ordering model can obtain an optimal solution for the inventory problem involving deteriorating items under uncertain and random demand and deterioration.

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