Optimal Ordering Policy for Deteriorating Items Having Constant Demand and Deterioration Rate

Abstract

This study derives an optimal ordering policy for perishable products. Here the demand considered is constant demand and items considered have a constant rate of deterioration. The sensitivity analysis of model has been done and formula for calculating optimal ordering quantity has been derived. The model follows the classical EOQ model, i.e. the point of minima is the point where the total ordering cost is equal to the sum of holding costs and deterioration cost.