OPTIMAL AND HEURISTIC INVENTORY REPLENISHMENT MODELS FOR DETERIORATING ITEMS WITH EXPONENTIAL TIME-VARYING DEMAND

In this paper we present optimal and heuristic procedures for the inve ntory replenishment problem in which items are deteriorating at a cons tant rate. The demand rates are changing exponentially with time over a known and finite planning horizon. We have developed an iterative nu merical procedure to find the optimal replenishment schedule. The firs t two heuristics are based on the economic order interval approximatio n. The third heuristic restricts all the replenishment cycles over the planning horizon to be equal over the planning horizon. The last thre e heuristics are extended versions of the Silver-Meal heuristic, the l east cost approach, and the least-unit cost heuristic which were used in the inventory literature for the case of discrete time-varying dema nd without deterioration. We further assess the cost and computation t ime effectiveness of the six heuristics. The results of a simple of 14 40 problems show that the extended least cost approach is the most cos t effective.