The Price and Production Level of the Deteriorating Inventory System.
AIR FORCE INST OF TECH WRIGHT-PATTERSON AFB OH SCHOOL OF SYSTEMS AND LOGISTICS
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This paper presents a modified model for a deteriorating inventory system determining price and production levels. Specifically, the exponential distribution is used to represent the distribution of the time to deterioration. The optimal production lot size is derived under conditions of continuous review, constant demand and no shortages. The sensitivity to changes in perishability and product price is considered. Finally, a numerical example is solved to show the impact of price and deterioration and to derive the optimal production lot size.
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