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 inventory replenishment problem in which items are deteriorating at a constant rate. The demand rates are changing exponentially with time over a known and finite planning horizon. We have developed an iterative numerical procedure to find the optimal replenishment schedule. The first two heuristics are based on the economic order interval approximation. The third heuristic restricts all the replenishment cycles over the planning horizon to be equal over the planning horizon. The last three heuristics are extended versions of the Silver-Meal heuristic, the least cost approach, and the least-unit cost heuristic which were used in the inventory literature for the case of discrete time-varying demand without deterioration. We further assess the cost and computation time effectiveness of the six heuristics. The results of a simple of 1440 problems show that the extended least cost approach is the most cost effective.