Deterministic Deteriorating Product´s Production-Inventory Model With Variable Productivity

The paper studies such a deterministic product´s production-inventory system where the products produced are subject to continuous deterioration, and the manufacturing cost is influenced by productivity. The product is assumed to have a significant rate of deterioration. The model has only one producer and one retailer. The demand rate to the retailer for the product is constant, and an exponential distribution is used to represent the distribution of the time to deterioration. The producer´s cost and revenue in a horizon includes manufacturing cost, setup cost, carrying cost and sales revenue. The retailer´s cost and revenue in a cycle includes order cost, carrying cost, products´ cost and sales revenue. Proper productivity is important in the model. After solving corresponding equations, near optimal productivity and near optimal order quantity and near optimal manufacturing quantity can be obtained.