A production inventory model for deteriorating items with backlog-dependent demand

Abstract

This paper investigates a production inventory model under classical EPQ framework with the assumption that the customer demand during the stock-out period is affected by the accumulated back-orders. The backlog rate is not fixed; instead, the demand during stock-out is assumed to decrease proportionally to the existing backlog which is thereby approximated by a piecewise constant function. Deteriorating items are taken into consideration in this work. For better illustration of the theoretical results and to highlight managerial insights, numerical examples are presented which are then compared to the results obtained by considering an exact (non-approximated) backlogging rate (from literature). The comparisons indicate high quality results for the approximated model.