AN INVENTORY MODEL FOR ITEMS WITH IMPERFECT QUALITY UNDER INFLATION AND DEFLATION AND TIME DISCOUNTING

摘要

The assumptions necessary to justify the use of classical economic order quantity (EOQ) model are rarely met. This has led many researchers to study the EOQ models extensively under real-life situations. In a recent paper, Salameh and Jaber extended the traditional EOQ model by accounting for imperfect quality items when using the EOQ formulae. However, their model didn't consider the effect of inflation and the time value of money. In this paper, we redevelop the model of Salameh and Jaber by relaxing their assumptions and modifying their mathematical formulations. Our models can be applicable to both inflation and deflation for items with imperfect quality. This study shows that the optimal order quantity and cycle length vary with the difference between inflation and time discount. Some special cases of the models are discussed in brief. Numerical examples are provided to illustrate the developed models.