Inventory model with two rates of production for deteriorating items with permissible delay in payments
Goyal (1985) ['Economic Order Quantity Under Conditions of Permissible Delay in Payments', Journal of Operational research Society, 36, 35-38] assumed that unit selling price and unit purchasing price are equal. But in real-life the scenario is different. The purpose of this article is to reflect the real life problem by allowing unit selling price and purchasing price to be unequal. Our model is a continuous production control inventory model for deteriorating items in which two different rates of production are available. The results are illustrated with the help of a numerical example. We discuss the sensitivity of the solution together with the changes of the values of the parameters associated with the model. Our model may be applicable in many manufacturing planning situations where management practices for deterioration are stringent; e. g. the two-production rate will be more profitable than the one-production rate in the manufacture of cold, asthma and allergy medicine. Our proposed model might be applicable to develop a prototype advance planning system for those manufacturers to integrate the management science techniques into commercial planning.
inventory deteriorating items permissible delay of payments