AN INVENTORY MODEL FOR NON-INSTANTANEOUS DETERIORATING ITEMS WITH IMPERFECT QUALITY, DELAY IN PAYMENTS AND TIME VALUE MONEY

In this paper, Economic Order Quantity ( ) based model for non-instantaneous deteriorating items with imperfect quality, permissible delay in payments and inflation is proposed. We adopt a time-dependent demand function. Also, the effects of time value of money are studied using the Discounted Cash Flow approach. Moreover, we assume that orders may contain a random proportion of defective items, which follow a known distribution and an inspection process is utilized to describe the defective proportion of the received lot. The mathematical model have been derived for obtaining the optimal number of cycle and the optimal inspection time so that the present value of total cost in a finite time horizon is minimized. An algorithm has been presented to find the optimal solution. Finally, numerical examples are provided to illustrate the solution procedure.