An EOQ Model for Delayed Deteriorating Items: Analysis of Three-Stage Consumption, Dual Storage Facilities, and Variable Partial Backlogging Rates

Abstract

Study’s Excerpt

• An Economic Order Quantity (EOQ) model that accounts for items with delayed deterioration by integrating three distinct stages of consumption rates, dual storage facilities, and partially backlogged shortages was proposed.
• The model can minimize overall variable costs and establish the conditions for the existence and uniqueness of the optimal solution by optimizing cycle length, order quantity, and depletion timing.
• The model could help in inventory management of perishable goods, particularly in scenarios involving multiple storage options and consumption phases.

Full Abstract

This paper presents an Economic Order Quantity (EOQ) model for items with delayed deterioration, incorporating three distinct stages of consumption rates, dual storage facilities, and shortages.  The model assumes that the average consumption rates before and after the onset of deterioration, as well as during shortages, are constant but differ from one another.  The shortages are partially backlogged and vary according to the waiting time until the next replenishment.  The model aims to minimize the overall variable cost per unit of time by optimizing the cycle length, order quantity, and the timing at which the inventory in the owned warehouse is depleted.  The paper establishes the necessary and sufficient conditions to ensure the existence and uniqueness of the optimal solution.  A sensitivity analysis is conducted, and the findings are used to derive managerial insights.