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Planning Horizon for Production Inventory Models with Production Rate Dependent on Demand and Inventory Level

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  • Jennifer Lin
  • Henry C. J. Chao
  • Peterson Julian

Abstract

This paper discusses why the selection of a finite planning horizon is preferable to an infinite one for a replenishment policy of production inventory models. In a production inventory model, the production rate is dependent on both the demand rate and the inventory level. When there is an exponentially decreasing demand, the application of an infinite planning horizon model is not suitable. The emphasis of this paper is threefold. First, while pointing out questionable results from a previous study, we propose a corrected infinite planning horizon inventory model for the first replenishment cycle. Second, while investigating the optimal solution for the minimization problem, we found that the infinite planning horizon should not be applied when dealing with an exponentially decreasing demand. Third, we developed a new production inventory model under a finite planning horizon for practitioners. Numerical examples are provided to support our findings.

Suggested Citation

  • Jennifer Lin & Henry C. J. Chao & Peterson Julian, 2013. "Planning Horizon for Production Inventory Models with Production Rate Dependent on Demand and Inventory Level," Journal of Applied Mathematics, Hindawi, vol. 2013, pages 1-9, March.
    • Handle: RePEc:hin:jnljam:961258
    DOI: 10.1155/2013/961258
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    Cited by:

    1. Han-Wen Tuan & Kuo-Chen Hung & Gino K. Yang, 2021. "Inventory Model with Fixed Shelf Life under Generalized Non-Increasing Demand," Mathematics, MDPI, vol. 9(21), pages 1-15, October.

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