Effect of deteriorating items on the instantaneous replenishment model

The physical characteristics of stocked items dictate the nature of invento ry policies implemented to manage and control. The traditional economic ord er quantity model (EOQ) assumes that items stocked preserve their character istics during their stay in inventory. The question is how reliable are the EOQ models when items stocked deteriorate over time. This paper introduces a modified EOQ model in which it assumes that a percentage of the on-hand inventory is wasted due to deterioration. A mathematical model is developed and numerical examples provided to illustrate the solution procedure.