Heuristic models for deteriorating items with shortages and time-varying demand and costs

Abstract In this article, we develop and analyse two heuristic models for the inventory replenishment problem in which the demand rate, deterioration rate, ordering cost, holding cost and shortage cost are all assumed to vary with time. Shortages in inventory are allowed and are completely backlogged. Our objective is to determine the optimal replenishment policy of the inventory system whether or not a finite planning horizon exists. Both the heuristic models are illustrated with the help of a numerical example. Finally, the sensitivity analysis is also presented for the heuristic rule that outperforms the other one.