OPTIMAL INVENTORY POLICIES UNDER PRODUCT OBSOLESCENT CIRCUMSTANCE

This paper presents a simple mathematical model for optimization of a single-item inventory system with product obsolescence. The demand is assumed to occur at the constant rate, whereas the lifetime distribution for an item identically follows an arbitrary one. In the model, two kinds of order forms, which are referred to as regular and expedited orders, respectively, are considered. First, we obtain the optimal ordering time and economic order quantity minimizing the long-run average cost under certain conditions. Second, we consider the inventory policy maximizing the stationary availability from the reliability theoretical viewpoint. Similar to the case of expected cost criterion, the optimal reliable ordering policy is derived under the milder conditions.