ECONOMIC PRODUCTION LOT-SIZE MODEL FOR DETERIORATING ITEMS WITH PARTIAL BACK-ORDERING

This paper formulates an economic production policy for deteriorating items with partial back-ordering. An implicit assumption in most inventory control models is that when there is a shortage, either complete back-ordering or complete lost sale is assumed. Such an assumption is not always tenable in view of the different responses by customers during stockout. In this paper, we develop an economic production plan for deteriorating items with partial back-ordering. Two numerical examples are used to illustrate the theory. Computational results indicate that the policy of our model leads to lower cost.