A production–inventory model incorporating the effect of preservation technology investment when demand is fluctuating with time

In most of the inventory models in the literature, the rate of deterioration of goods is viewed as an exogenous variable, which is not subject to control. In the real market, firms can reduce the rate of deterioration of products by means of effective capital investment in preservation technology. I...

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Published in:	Journal of computational and applied mathematics Vol. 239; pp. 25 - 36
Main Authors:	Hsieh, Tsu-Pang, Dye, Chung-Yuan
Format:	Journal Article
Language:	English
Published:	Elsevier B.V 01.02.2013
Subjects:	Demand Deterioration Financing Inventory Investment Marketing Mathematical models Optimization Particle swarm optimization Preservation Preservation technology investment Time-varying demand Preservation technology investment Time-varying demand Deterioration Particle swarm optimization Inventory
ISSN:	0377-0427, 1879-1778
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Abstract	In most of the inventory models in the literature, the rate of deterioration of goods is viewed as an exogenous variable, which is not subject to control. In the real market, firms can reduce the rate of deterioration of products by means of effective capital investment in preservation technology. In this research, we formulate a production–inventory model for deteriorating items with time-varying demand and finite replenishment rate by allowing preservation technology cost as a decision variable in conjunction with production policy. The objective is to find the optimal production and preservation technology investment strategies while minimizing the total cost over the planning horizon. A traditional particle swarm optimization is coded and used to solve the mixed-integer nonlinear programming problem. Some numerical examples are used to illustrate the features of the proposed model.
AbstractList	In most of the inventory models in the literature, the rate of deterioration of goods is viewed as an exogenous variable, which is not subject to control. In the real market, firms can reduce the rate of deterioration of products by means of effective capital investment in preservation technology. In this research, we formulate a production-inventory model for deteriorating items with time-varying demand and finite replenishment rate by allowing preservation technology cost as a decision variable in conjunction with production policy. The objective is to find the optimal production and preservation technology investment strategies while minimizing the total cost over the planning horizon. A traditional particle swarm optimization is coded and used to solve the mixed-integer nonlinear programming problem. Some numerical examples are used to illustrate the features of the proposed model.
Author	Dye, Chung-Yuan Hsieh, Tsu-Pang
Author_xml	– sequence: 1 givenname: Tsu-Pang surname: Hsieh fullname: Hsieh, Tsu-Pang organization: Department of Business Administration, Aletheia University, Tamsui, Taipei 251, Taiwan, ROC – sequence: 2 givenname: Chung-Yuan surname: Dye fullname: Dye, Chung-Yuan email: chungyuandye@gmail.com organization: Graduate School of Business and Administration, Shu-Te University, Yen-Chao, Kaohsiung 824, Taiwan, ROC
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Keywords	Preservation technology investment Time-varying demand Deterioration Particle swarm optimization Inventory
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SubjectTerms	Demand Deterioration Financing Inventory Investment Marketing Mathematical models Optimization Particle swarm optimization Preservation Preservation technology investment Time-varying demand
Title	A production–inventory model incorporating the effect of preservation technology investment when demand is fluctuating with time
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