Indian Journal of Science and Technology

Abstract

Experts believe that a large percentage of total corporate capitals lie in organizational inventories. Therefore, a more thorough and intelligent review of the inventory issue empowers organizations to optimally make use of all their resources to achieve better efficiency and effectiveness. This might, in turn, help organizations in reaching their goals. In this study, an inventory model under general discount and stochastic deteriorating conditions is developed. Deterioration was studied as a Stochastic variable while other variables were deterministic. The objective of this study was to reduce the expected cost of the whole system. First, the reorder point was determined by the EOQ model, and then other price cut points (due to discount or inventory Deterioration) were determined. Finally, the total cost of the system was computed for all points, by which the reorder point had the lowest cost. The developed model was further analyzed through a numerical example.

Keywords: Inventory; Deterioration; Discount; Stochastic Model; EOQ