International Journal of Mathematics and Statistics Invention (IJMSI)

E-ISSN: 2321 4767 P-ISSN: 2321 - 4759

www.ijmsi.org Volume 3 Issue 8 || December. 2015 || PP-01-14

Inventory Model with Different Deterioration Rates with Stock

and Price Dependent Demand under Time Varying Holding Cost
and Shortages
S.R. Sheikh1 and Raman Patel2
1

Department of Statistics, V.B. Shah Institute of Management, Amroli, Surat

2
Department of Statistics, Veer Narmad South Gujarat University, Surat

ABSTRACT: An inventory model for deteriorating items with stock and price dependent demand is developed.
Holding cost is considered as function of time. Shortages are allowed and completely backlogged. Numerical
example is provided to illustrate the model and sensitivity analysis is also carried out for parameters.
KEY WORDS: Inventory model, Deterioration, Price dependent demand, Stock dependent demand, Time
varying holding cost, Shortages

I. INTRODUCTION
In real life, deterioration of items is a general phenomenon for many inventory systems and therefore
deterioration effect cannot be ignored. Many researchers have studied EOQ models for deteriorating items in
past. Ghare and Schrader [2] considered no-shortage inventory model with constant rate of deterioration. The
model was extended by Covert and Philip [1] by considering variable rate of deterioration. By considering
shortages, the model was further extended by Shah and Jaiswal [14]. The related work are found in (Nahmias
[9], Raffat [12], Goyal and Giri [3], Ouyang et al. [10], Wu et al. [16]).
Hill [4] considered inventory model with ramp type demand rate. Mandal and Pal [6] developed
inventory model with ramp type demand with shortages. Hung [5] considered inventory model with arbitrary
demand and arbitrary deterioration rate. Salameh and Jaber [13] developed a model to determine the total profit
per unit of time and the economic order quantity for a product purchased from the supplier. Mukhopadhyay et
al. [8] developed an inventory model for deteriorating items with a price-dependent demand rate. The rate of
deterioration was taken to be time-proportional and a power law form of the price-dependence of demand was
considered. Teng and Chang [15] considered the economic production quantity model for deteriorating items
with stock level and selling price dependent demand. Mathew [7] developed an inventory model for
deteriorating items with mixture of Weibull rate of decay and demand as function of both selling price and time.
Patel and Parekh [11] developed an inventory model with stock dependent demand under shortages and variable
selling price.
Inventory models for non-instantaneous deteriorating items have been an object of study for a long
time. Generally the products are such that there is no deterioration initially. After certain time deterioration
starts and again after certain time the rate of deterioration increases with time. Here we have used such a
concept and developed the deteriorating items inventory models.
In this paper we have developed an inventory model with stock and price dependent demand with
different deterioration rates for the cycle time. Shortages are allowed and completely backlogged. To illustrate
the model, numerical example is taken and sensitivity analysis for major parameters on the optimal solutions is
also carried out.

II. ASSUMPTIONS AND NOTATIONS

The following notations are used for the development of the model:
NOTATIONS:
D(t) : Demand rate is a linear function of price and inventory level (a + bI(t) - p, a>0, 0<b<1, >0)
A : Replenishment cost per order
c
: Purchasing cost per unit
p
: Selling price per unit
T : Length of inventory cycle
I(t) : Inventory level at any instant of time t, 0 t T
Q1 : Order quantity intially

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Inventory Model with Different Deterioration Rates

Q2
Q

t
c2

: Shortages of quantity
: Order quantity
: Deterioration rate during 1 t 2, 0< <1
: Deterioration rate during , 2 t T, 0< <1
: Shortage cost per unit item
: Total relevant profit per unit time.

ASSUMPTIONS:
The following assumptions are considered for the development of the model.
The demand of the product is declining as a function of price and inventory level.
Replenishment rate is infinite and instantaneous.
Lead time is zero.
Shortages are permitted and completely backlogged.
Deteriorated units neither be repaired nor replaced during the cycle time.

III. THE MATHEMATICAL MODEL AND ANALYSIS

Let I(t) be the inventory at time t (0 t T) as shown in figure.

Figure 1
The differential equations which describes the instantaneous states of I(t) over the period (0, T) are given by :
d I(t)

= - (a + b I(t) - p ),

0 t 1

(1)

+ I(t) = - (a + b I(t) - p ),

1 t 2

(2)

+ tI(t) = - (a + b I(t) - p ),

2 t t0

= - (a + b I(t) - p ),

t0 t T

dt
d I(t)
dt
d I(t)
dt
d I(t)
dt

(3)
(4)

with initial conditions I(0) = Q1, I(1) = S1, I(t0) = 0, and I(T) = -Q2.
Solutions of these equations are given by
I( t) = Q 1 ( 1 - b t) - ( a t +

1
2

b t - p t -

bpt

- abt

+ b p t ),

(5)

I(t) =

1
1

2
2
2
2
a - t - p 1 - t +
a +b 1 - t p +b 1 - t
1
2
2

2
2
2
2
- a + b t 1 - t + p + b t 1 - t - abt 1 - t + pbt 1 - t

I(t) =

1
1
1
1

2
2
2
2
3
3
3
3
a t -t - p t 0 -t + a b t 0 -t - p b t 0 -t + a t 0 -t - p t 0 -t -a b t t 0 -t + b p t t 0 -t
0
2
2
6
6

1
1
1
1
1
3
3
3
3
2
2
2
2
2
2
2
2
1
- a b t t 0 -t + b p t t 0 -t - a t t 0 -t + p t t 0 -t + b p t t 0 - t - a b t t 0 -t
6
6
2
2
4
4

I(t) =

1
1

2
2
2
2
a t - t - p t0 - t +
ab t 0 - t pb t 0 - t
0
2
2

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+ S 1 1 +

+b 1

- abt t 0 - t + b pt t 0 - t .

- t

(6)

(7)

(8)

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Inventory Model with Different Deterioration Rates

(by neglecting higher powers of )
From equation (5), putting t = 1, we have
S1

Q1 =

1
1

2
2
2
2
bp 1 - ab 1 + bp 1 .
a 1 - p 1 + b 1

(9)

2
2
1 - b 1
1 - b 1
From equations (6) and (7), putting t = 2, we have

1
1

2
2
2
2
a - - p 1 - 2 + a + b 1 - 2 - p + b 1 - 2
1 2
2
2
I( 2 ) =

2
2
2
2
-a + b 2 1 - 2 + p + b 2 1 - 2 -a b 2 1 - 2 + b p 2 1 - 2

2
a t - 2 - p t0 - 2 +
ab t 0 0
2

I( 2 ) =
- ab 2 t 0 - 2 + bp 2 t 0 - 2

+ 1 p 2 t - + 1 bp 2 t2
2
0
2
2 0
2
4

2
2

ab

6
-

2
2

bp

t
1

3
0

2
0

ab

3
2

2
2

2
2

+
t

2
0

+
1

bp

6
-

2
2

t
2

3
0

3
2

+ S 1 1 + + b 1 - 2

3
2

2
2

3
0

t0

3
2

(10)

(11)

So from equations (10) and (11), we get

1

S1 =

1 +

+b 1

1
1
1
1

2
2
2
2
3
3
3
3
a t - 2 - p t0 - 2 +
ab t 0 - 2 bp t0 - 2 +
a t0 - 2 p t0 - 2
0
2
2
6
6

1
1
1
3
3
3
3
2

- ab 2 t0 - 2 + bp 2 t 0 - 2 ab 2 t 0 - 2 +
bp 2 t0 - 2 a 2 t 0 - 2

6
6
2

+ 1 p 2 t - + 1 b p 2 t 2 - 2 - 1 a b 2 t 2 - 2 -a - + p - - 1 a + b 2 - 2
1 2
2
0
2
2 0
2
2 0
2
1
2
1
2

2
4
4
2

1
2
2
2
2
2
2
+
p + b 1 - 2 + a + b 2 1 - 2 - p + b 2 1 - 2 + a b 2 1 - 2 -b p 2 1 - 2
2

(12)

Putting value of S1 from equation (12) into equation (9), we have

1

Q1 =

1 -

b 1 1 +

+b 1

- 2

1
1
1
1

2
2
2
2
3
3
3
3
a t - 2 - p t 0 - 2 + a b t 0 - 2 - b p t 0 - 2 + a t 0 - 2 - p t 0 - 2 -a b 2 t 0 - 2
0
2
2
6
6

1
1
1
1
3
3
3
3
2
2

+ bp 2 t0 - 2 ab 2 t 0 - 2 +
bp 2 t0 - 2 a 2 t 0 - 2 + p 2 t 0 - 2

6
6
2
2

+ 1 b p 2 t 2 - 2 - 1 a b 2 t 2 - 2 -a - + p - - 1 a + b 2 - 2 + 1 p + b 2 -
1 2
1
2 0
2
2 0
2
1
2
1
2
4
4
2
2

2
2
2
2
+ a + b 2 1 - 2 - p + b 2 1 - 2 + ab 2 1 - 2 - bp 2 1 - 2

1
1

2
2
2
b1 +
bp 1 - ab 1
a 1 - p 1 +
2
2

1 -

b1

2
2

(13)

Putting t = T in equation (8), we have

Q2 =

a T - t0

- p T - t0

1
2

ab T

- t0

1
2

pb T

- t 0 - abT T - t 0 + b pT T - t 0
2

. .

(14)

Using (13) in (5), we have

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Inventory Model with Different Deterioration Rates

I( t) =

( 1 -b t)

1 - b 1 1 +

+b 1

- 2

1
1
1
1

2
2
2
2
3
3
3
3
a t - - p t 0 - 2 + a b t 0 - 2 - b p t 0 - 2 + a t 0 - 2 p t 0 - 2 - ab 2 t0 - 2
0 2

2
2
6
6

1
1
1
1
3
3
3
3
2
2

+ bp 2 t0 - 2 ab 2 t 0 - 2 +
bp 2 t0 - 2 a 2 t0 - 2 +
p 2 t0 - 2

6
6
2
2

1
1
1
1
+ b p 2 t 2 - 2 - a b 2 t 2 - 2 -a - + p - - a + b 2 - 2 + p + b 2 - 2

2
0
2
2
0
2
1
2
1
2
1
2
1
2
4

4
2
2

2
2
2
2
+ a + b 2 1 - 2 - p + b 2 1 - 2 + a b 2 1 - 2 - b p 2 1 - 2

1
1

2
2
2
( 1 -b t) a 1 - p 1 + b 1 +
bp 1 - ab 1
2
2

1 -

b1

(15)

1
1

2
2
2
- at +
bt - pt +
bpt + abt
2
2

Based on the assumptions and descriptions of the model, the total relevant profit (), include the following
elements:
(i) Ordering cost (OC) = A
(16)
1

t0

(ii)

HC =

( x + y t) I( t) d t =

( x + y t) I( t) d t +

t0

( x + y t) I( t) d t +

( x + y t) I( t) d t
2

1
1
1
1
1 5
5

6
2
2
3
3
= x at 0 - pt0 + abt 0 bpt 0 + at 0 pt0 t0 +
y
ab bp t0
2
2
6
6
6 12
12

a 1 - p 1

1

1 + ( + b ) -
1
2

1
1
1
1

2
2
2
2
3
3
3
3
a t 0 - 2 - p t 0 - 2 + a b t 0 - 2 - b p t 0 - 2 + a t 0 - 2 - p t 0 - 2 -a b 2 t 0 - 2
2
2
6
6

1
1
1
1

3
3
3
3
2
2
a b 2 t 0 - 2 + b p 2 t 0 - 2 - a 2 t 0 - 2 + p 2 t 0 - 2
+ bp 2 t0 - 2 + x

6
6
2
2
+
1
1
2
2
2
2
2
2
2
2
1
+ bp 2 t0 - 2 ab 2 t 0 - 2 - a 1 - 2 + p 1 - 2 a +b 1 - 2
4
4
2

1
+ p + b 2 - 2 + a + b - - p + b - + a b 2 - 2 -b p 2 - 2
1
2
2
1
2
2
1
2
2
1
2
2
1
2

1
1
2
2
1 + ( + b ) +
a ( + b ) 1 p ( + b ) 1
1

2
2

a 1 - p 1

1
+

1 + + b 1 - 2

1
1
1
1

2
2
2
2
3
3
3
3
a t 0 - 2 - p t 0 - 2 + a b t 0 - 2 - b p t 0 - 2 + a t 0 - 2 - p t 0 - 2 -a b 2 t 0 - 2
2
2
6
6

1
1
1
1

3
3
3
3
2
2
+ bp 2 t0 - 2 ab 2 t 0 - 2 +
bp 2 t0 - 2 a 2 t 0 - 2 + p 2 t 0 - 2
- x

6
6
2
2

1
1
1
1
2
2
2
2
2
2
2
2
2
2
+ bp
t - 2 - a b 2 t 0 - 2 -a 1 - 2 + p 1 - 2 - a + b 1 - 2 + p + b 1 - 2
2 0
4
4
2
2

2
2
2
2
+ a + b 2 1 - 2 - p + b 2 1 - 2 + a b 2 1 - 2 - b p 2 1 - 2

1 + + b + 1 a ( + b ) 2 - 1 p ( + b ) 2

1
1
1
1

2
2

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Inventory Model with Different Deterioration Rates

1
1
1
1
1
1
2
2
bp +
pt0 +
bpt0 +
ab at 0 abt 0

x2
2
4
2
2
4
1

3
-
2
3

1
1

3
3
bpt 0 - abt 0 + bpt 0 abt 0

+ y -a + p +

6
6

1 1
1
1
1
1
1
1

1
2
2
4
p + y - bp +
pt0 +
bpt0 +
ab at 0 abt 0 2
x a 4 3
3
2
2
4
2
2
4

5
1

1
5
1 5
x
ab bp + y a p 2
5 12
1
2
3
3

1
1
1
1
1
1
1

3
3
2
2
3
3 2
+
x -a + p + b p t 0 -a b t 0 + b p t 0 - a b t 0 + y a t 0 - p t 0 + a b t 0 - b p t 0 + a t 0 - t 0 t 0
2
6
6
2
2
6
6

1
1
1
4
x ab - bp + y a + b - p + b 1
2
4
2

1
1

p +b
x a +b 2
2

-a +
1 + + b 1 - 2

1
1
1
1

2
2
2
2
3
3
3
3

a t 0 - 2 - p t 0 - 2 + a b t 0 - 2 - b p t 0 - 2 + a t 0 - 2 - p t 0 - 2 -a b 2 t 0 - 2

2
2
6
6

1
1
1
1
3
3
3
3
2
2

ab 2 t 0 - 2 +
bp 2 t 0 - 2 a 2 t 0 - 2 + p 2 t 0 - 2
+ bp 2 t0 - 2 3

6
6
2
2
+ y

1
1
1
2
2
2
2
2
2
2
2
2
2
1

+ b p 2 t 0 - 2 - a b 2 t 0 - 2 -a 1 - 2 + p 1 - 2 - a + b 1 - 2 + p + b 1 - 2

4
4
2
2

+ a + b 2 1 - 2 - p + b 2 1 - 2 + a b 2 12 - 22 - b p 2 12 - 22

- - b - a + b + p + b - a b 2 + b p 2 + p
1
1
1
1

1
-a +
1 + + b 1 - 2


1
1
1
1

2
2
3
3
3
3
a t 0 - 2 - p t 0 - 2 + a b t 02 - 22 b p t 0 - 2 + a t 0 - 2 - p t 0 - 2 -a b 2 t 0 - 2

2
2
6
6

1
1
1
1
3
3
3
3
2
2

ab 2 t 0 - 2 +
b p 2 t 0 - 2 - a 2 t 0 - 2 +
p 2 t0 - 2

+ bp 2 t0 - 2 1

6
6
2
2
/- x
2 1
1
1
1
2
2
2
2
2
2
2
2
2
2

+ b p 2 t 0 - 2 - a b 2 t 0 - 2 -a 1 - 2 + p 1 - 2 - a + b 1 - 2 + p + b 1 - 2
4
4
2
2

+ a + b - - p + b - + ab 2 - 2 - bp 2 - 2
2
1
2
2
1
2
2
1
2
2
1
2

2
2
- -b - a + b + p + b - a b + b p + p
1
1
1
1

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Inventory Model with Different Deterioration Rates

1
a 1 - p 1 +
1 + + b 1 - 2


1
1
1
1

a t 0 - 2 - p t 0 - 2 + a b t 02 - 22 - b p t 02 - 22 + a t 30 - 32 - p t 30 - 32 -a b 2 t 0 - 2

2
2
6
6

1
1
1
1
3
3
3
3
2
2

ab 2 t 0 - 2 +
b p 2 t 0 - 2 - a 2 t 0 - 2 + p 2 t 0 - 2
+ bp 2 t0 - 2
6
6
2
2
1

y
1
1
1
2
2
2
2
2
2
2
2
2
2
1
+ b p 2 t 0 - 2 - a b 2 t 0 - 2 -a 1 - 2 + p 1 - 2 - a + b 1 - 2 + p + b 1 -
4
4
2
2

+ a + b - - p + b - + ab 2 - 2 - bp 2 - 2
2
1
2
2
1
2
2
1
2
2
1
2

1
1
2
2
a +b 1 p +b 1
1+ +b 1 +
2
2

1
1
1
1
1
1
2
2
bp+ pt 0 + bpt 0 + ab- at 0 - abt 0
x2
4
2
2
4
1 5
5
2

t3 +
+
ab bp
0
x

3
5
1
2
1
2
1
1

3
3
bpT - abt 0 + bpt 0 abT
+ y -a + p +

6
6

2
2

1
5
+ y a- p t 0
3
3

1 1
1
1
1
1
1
1

1
2
2 4
pt0 +
bpt0 +
ab at 0 abt 0 t0
x a - p + y - bp +
4 3
3
2
4
2
2
4

+ x

- b 1 1 +

+b 1

- 2

1
1
1

2
2
2
2
3
a t - 2 - p t0 - 2 +
ab t 0 - 2 bp t0 - 2 +
a t0
0
2
2
6

1
1
1
3
3
3
3
2
+ bp t -
ab 2 t 0 - 2 +
bp 2 t0 - 2 a 2
2 0
2

6
6
2

1
1
2
2
2
+ bp 2 t2 - 2 ab 2 t 0 - 2 - a 1 - 2 + p 1 - 2 2
0
2
4
4

1
2
2
p +b 1 - 2 + a +b 2 1 - 2 - p +b 2 1 - 2
+

2
a 1 - p 1 +
+

b1 +

1
2

bp 1 - ab 1

- b1

- 2 -

t0

1
2

- 2

p t 0 - 2 - ab 2 t 0 - 2
3

p 2 t0 - 2
2

a +b 1 - 2
2

+ ab 2 1 - 2
2

- bp 2 1 - 2
2

1 1
1
1
4
5
+
ybbp + ab 1 +
y ab - bp 2

4 2
2
5

+ 1 x ab - bp + y 1 a + b - 1 p + b 4 + 1 x 1 a + b - 1 p + b

4
2
3 2
2
2

-a +

1 + + b 1 - 2

1
1
1
1
2
2
2
2
3
3
3
3
a t 0 - 2 - p t 0 - 2 + a b t 0 - 2 - b p t 0 - 2 + a t 0 - 2 - p t 0 - 2 -a b 2 t 0 - 2 + b p 2 t 0 - 2

2
2
6
6

1
1
1
1
1
1

3
3
3
3
2
2
2
2
2
2
2
2
- a b 2 t 0 - 2 + b p 2 t 0 - 2 - a 2 t 0 - 2 + p 2 t 0 - 2 + b p 2 t 0 - 2 - a b 2 t 0 - 2

6
6
2
2
4
4
+ y

1
1

2
2
2
2

-a 1 - 2 + p 1 - 2 - a + b 1 - 2 +
p +b 1 - 2 + a +b 2 1 - 2 - p +b 2 1 - 2

2
2

2
2
2
2
+ ab 2 1 - 2 - bp 2 1 - 2

2
2
- -b - a + b 1 + p + b 1 - a b 1 + b p 1 + p

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Inventory Model with Different Deterioration Rates

1
-a +
1 + + b 1 - 2


1
1
1
1

2
2
2
2
3
3
3
3
a t 0 - 2 - p t 0 - 2 +
a b t 0 - 2 - b p t 0 - 2 +
a t 0 - 2 - p t 0 - 2 -a b 2 t 0 - 2

2
2
6
6

1
1
1
1
3
3
3
3
2
2

ab 2 t 0 - 2 +
b p 2 t 0 - 2 a 2 t 0 - 2 +
p 2 t0 - 2
+ bp 2 t0 - 2
1
6
6
2
2
x
+

2
1
1
1
2
2
2
2
2
2
2
2

bp 2 t0 - 2 ab 2 t 0 - 2 - a 1 - 2 + p 1 - 2 a +b 1 - 2
+
4
4
2

1
2
2
2
2
2
2

p + b 1 - 2 + a + b 2 1 - 2 - p + b 2 1 - 2 + a b 2 1 - 2 -b p 2 1 - 2
+
2

2
2
- -b - a + b 1 + p + b 1 - a b 1 + b p 1 + p

1
a 1 - p 1 +
1 + + b 1 - 2


1
1
1
1

2
2
2
2
3
3
3
3
b p t 0 - 2 + a t 0 - 2 - p t 0 - 2 -a b 2 t 0 - 2
a t 0 - 2 - p t 0 - 2 + a b t 0 - 2
2
2
6
6

1
1
1
1
3
3
3
3
2
2

b p 2 t 0 - 2 a 2 t 0 - 2 +
p 2 t0 - 2
1 + b p 2 t 0 - 2 - a b 2 t 0 - 2 +
6
6
2
2
+
y

2
1
1
1
1

+ b p 2 t 2 - 2 - a b 2 t 2 - 2 -a - + p - - a + b 2 - 2 + p + b 2 - 2
2
0
2
2
0
2
1
2
1
2
1
2
1
2

4
4
2
2

2
2
2
2

+ a + b 2 1 - 2 - p + b 2 1 - 2 + ab 2 1 - 2 - bp 2 1 - 2

1
1

1 + a + b 1 + a + b 12 - p + b 12

2
2

2
2

2
2

1
1

b bp+ ab
x2
2

1 -b 1 1 + + b 1 - 2

1
1
1
1

2
2
2
2
3
3
3
3
a t -
- p t 0 - 2 + a b t 0 - 2 - b p t 0 - 2 + a t 0 - 2 - p t 0 - 2 -a b 2 t 0 - 2
0
2

2
2
6
6
1

1
1
1
1
+
3
3
2
2

+ b p t - - a b t 3 - 3 +
bp 2 t 0 - 2 a 2 t 0 - 2 +
p 2 t0 - 2
3
2
0
2
2
0
2
+ yb
6
6
2
2

1
1
1
1
2
2
2
2
2
2
2
2
2
2

+ b p 2 t 0 - 2 - a b 2 t 0 - 2 -a 1 - 2 + p 1 - 2 - a + b 1 - 2 + p + b 1 - 2
4
2
2

+ a + b - - p + b - + a b 2 - 2 - b p 2 - 2
2
1
2
2
1
2
2
1
2
2
1
2

1
1

2
2
2

b 1 + bp 1 - ab 1
b a 1 - p 1 +
2
2

- a + p

1
-b

1
1 -b 1 1 + + b 1 - 2

1
1
1
1

2
2
2
2
3
3
3
3

a t 0 - 2 - p t 0 - 2 + a b t 0 - 2 - b p t 0 - 2 +
a t 0 - 2 p t 0 - 2 - ab 2 t 0 - 2

2
2
6
6

1
1
1
1
3
3
3
3
2
2

+ bp t - a
b

t
-
a

2
0
2
2
0
2
2
0
2
2
0
2
2
0
2
1

xb
6
6
2
2
+

2 1
1
1
1
2
2
2
2
2
2
2
2
2
2
+ b p 2 t 0 - 2 - a b 2 t 0 - 2 -a 1 - 2 + p 1 - 2 - a + b 1 - 2 + p + b 1 - 2
4
2
2

4
2
2
2
2

+ a + b -

+
b

+
a
b

2 1

2 1
2
2
2
1
2
2
1
2

1
1

2
2
2
b a1 - p 1 +
b 1 + bp 1 - ab 1
2
2

- a + p

1
-b

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3
1

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Inventory Model with Different Deterioration Rates

1 -b 1 1 + + b 1 - 2

1
1
1
1

2
2
2
2
3
3
3
3

a t - - p t 0 - 2 + a b t 0 - 2 - b p t 0 - 2 +
a t0 - 2 p t0 - 2 - ab 2 t 0 - 2
0 2

2
2
6
6

1
1
1
1
3
3
3
3
2
2
+ bp t -

a
b

t
-
a

t
-
+

t
-

2
0
2
2
0
2
2
0
2
2
0
2
2
0
2

6
6
2
2
1 a
+
y

1
1
1
2 1
2
2
2
2
2
2
2
2
2
2
+ b p 2 t 0 - 2 - a b 2 t 0 - 2 -a 1 - 2 + p 1 - 2 - a + b 1 - 2 + p + b 1 - 2

4
2
2
4

2
2
2
2

+
a

+
b

+
b

+
a
b

2 1

2 1

2
2
2
1
2
2
1
2

1
1
2
2
2

a 1 - p 1 +
b 1 + bp 1 - ab 1

2
2
+

1 -b 1

6
-

2
1

5
1
1
1
1
5
6

2
2
3
3
y
ab bp 2 - x at0 - pt0 +
abt0 b p t0 +
at 0 t0 2
12
2
2
6
6
12

( 17)

1
1
1
1
1
1
1
1

3
3
2
2
3
3
2
5
x -a + p + b p t 0 -a b t 0 + b p t 0 - a b t 0 + y a t 0 - p t 0 + a b t 0 - b p t 0 + a t 0 - t 0 2 - y a b - b p 1
2
6
6
2
2
6
6
5

(by neglecting higher powers of )

(iii)

DC = c

I(t)d t +

tI(t)d t

a - 1 2 - p - 1 2 + 1 a +b 2 - 1 3 - 1 p +b 2 - 1 3
2
2
2
2
1 2
1 2
1 2
1 2

2
2
2
3
3

1 3
1 3
1
1
1 2 2 1 4
1 2 2 1 4
2
2

-a + b 1 2 - 2 + p + b 1 2 - 2 -a b 1 2 - 2 + p b 1 2 - 2

3
3
4
4
2

1 + + b ( 1 - 2 )

1
1
1
1

2
2
2
2
3
3
3
3
a t 0 - 2 - p t 0 - 2
a t 0 - 2 - p t 0 - 2 + a b t 0 - 2 - b p t 0 - 2 +

2
2
6
6

= c
1
1
1

3
2
3
2
2

-a b 2 ( t 0 - 2 ) + b p 2 ( t 0 - 2 ) - a b 2 t 0 - 2 + b p 2 t 0 - 2 - a 2 t 0 - 2

6
6
2

1
1
2
2
2
2
2
2
+ 1 p 2 t -

a
b

-a
(
t
-
)
+

p
(
t
-
)

2
0
2
2 0
2
2 0
2
0
2
0
2

2
4
4

1
1
- a + b 2 - 2 + p + b 2 - 2 + a + b ( - ) - p + b ( - )

1
2
1
2
2
1
2
2
1
2
2

2
2
2
2
+ ab 2 1 - 2 - bp 2 1 - 2

1 2
+ +b
2
2
1
2

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Inventory Model with Different Deterioration Rates

1
1
1
1
1
1
2
2
3
3
4
4
p1 + a +b 1 p +b 1 ab 1 +
bp 1
a 1 2
6
6
4
4
2

1 + + b ( 1 - 2 )

1
1
1
1
2
2
2
2
3
3
3
3

ab t 0 - 2 bp t0 - 2 +
a t 0 - 2 p t0 - 2
a t 0 - 2 - p t 0 - 2 +
2
2
6
6

1
1
1
3
3
3
3
2
ab 2 t 0 - 2 +
bp 2 t0 - 2 a 2 t 0 - 2

- a b 2 ( 1 - 2 ) + b p 2 ( 1 - 2 ) 6
6
2
- c +

1
1
1

2
2
2
2
2
2
2
+
p 2 t 0 - 2 +
bp 2 t0 - 2 a b 2 t 0 - 2 - a ( 1 - 2 ) + p ( 1 - 2 )

2
4
4

- 1 a + b 2 - 2 + 1 p + b 2 - 2 + a + b ( - ) - p + b ( - )

2 1 2

2 1 2
2
2

2
2

2
2
2
2

+ ab 2 1 - 2 - bp 2 1 - 2

2
1 + +b 1
2

1 5
5
1
1
1
1
1
1
6 11
5 1 1
2
2 4
abbp t 0 + a- p t 0 + - bp+ pt 0 + bpt 0 + ab- at 0 - abt 0 t 0

6 12
12
53
3
4 2
2
4
2
2
4

+ c
1
1
1
1
1
1
1
1
3
3 3
2
2
2
3 2
+ -a + p + b p t 0 -a b t 0 + b p t 0 - a b t 0 t 0 + a t 0 - p t 0 + a b t 0 - b p t 0 + a t 0 - p t 0 t 0
6
6
2
2
2
6
6

3
1 5
5
1
1
1
1
1
1
6 11
5 1 1
2
2
4
abbp 2 + a - p 2 + - bp+ pt 0 + bpt 0 + ab- a t 0 - abt 0 2

6 12
12
53
3
4 2
2
4
2
2
4

-c

1
1
1
1
1
1
1
1
3
3
3
2
2
2
3
2
at 0 pt0 2
+
-a + p + b p t 0 -a b t 0 + b p t 0 - a b t 0 2 + a t 0 - p t 0 + a b t 0 - b p t 0 +
3
6
6
2
2
2
6
6

(18)

(iv) Shortage cost (SC) is given by

SC = - c2

(v)

SR = p

= p

t0

11
1
1

3
3
2
2
bp T - t0 +

- a + p - abt 0 + bpt 0 T - t 0
ab 3
2
2
2

I(t)d t
= - c2

1
1
2
2
abt 0 T - t 0 bpt 0 T - t0
+ at 0 T - t 0 - pt 0 T - t 0 +

2
2

(19)

( a + b I( t) - p ) d t
0

(a + b I(t) - p )d t +

t0

(a + b I(t) - p )d t +

(a + b I(t) - p )d t +

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(a + b I(t) - p )d t

t0

9 | Page

Inventory Model with Different Deterioration Rates

1 -b 1 1 + + b ( 1 - 2 )

1
1
2
2
2
2

a t 0 - 2 - p t 0 - 2 +
ab t 0 - 2 bp t 0 - 2

2
2

1
1

3
3
3
3

a t 0 - 2 p t 0 - 2 - a b 2 ( t 0 - 2 ) + b p 2 ( t 0 - 2 )
+

6
6

1
1
1
3
3
3
3
2
2
1 ab
t - 2+
bp 2 t0 - 2 a 2 t 0 - 2 +
p 2 t 0 - 2

2 0
6
6
2
2

1
1

2
2
2
2
2
2

bp 2 t0 - 2 a b 2 t 0 - 2 - a ( 1 - 2 ) + p ( 1 - 2 )

4
4
a 1 + b

= p
1
1

2
2
2
2

a +b 1 - 2 +
p + b 1 - 2 + a + b 2 ( 1 - 2 )

2
2

2
2
2
2

- p + b 2 ( 1 - 2 ) + a b 2 1 - 2 - b p 2 1 - 2

2
- b1

1 2

1
1
1
1

2
2
2
2
b1 +
bp 1 - ab 1 1 b1

a1 - p 1 +
+
( 1 -b 1 )
2
2
2

1
1
1
1
1
2
3
2
3
3
a1 b1 +
p1 bp1 +
ab 1

2
6
2
6
3

- p

a - 1 2 - p - 1 2 + 1 a + b 2 - 1 3
2
2
2
1 2
1 2
1 2

2
2
2
3

1
1
1
1

2
3
2
3

p +b 1 2 2 - a + b 1 2 2

2
3
3

1
1
1
1
1 4

1 2 2

2
3
2
2
4
+ p + b 1 2 2 - ab 1 2 2 + pb 1 2 2

3
4
4
2

1 + + b ( - )

1 2

1
1
2
2
2
2
ab t 0 - 2 bp t0 - 2

a t 0 - 2 - p t 0 - 2 +
2
2
a + b
2
+p

1
1
3
3
3
3
a t0 - 2 p t 0 - 2 - a b 2 ( t 0 - 2 ) + b p 2 ( t 0 - 2 )

+
6
6

1
1
1

1
3
2
3
2
2
2
ab 2 t 0 - 2 +
bp 2 t0 - 2 a 2 t 0 - 2 +
p 2 t 0 - 2

6
6
2
2

+ 1 b p 2 t 2 - 2 - 1 a b 2 t 2 - 2 - a ( t - ) + p ( t - )
2 0
2
2 0
2
0
2
0
2

4
4

1
1
2
2
2
2

a +b 1 - 2 +
p + b 1 - 2 + a + b 2 ( 1 - 2 )

2
2

2
2
2
2
- p + b 2 ( 1 - 2 ) + a b 2 1 - 2 - b p 2 1 - 2

+ +b - 1 2
2
1 2
2

- p
2

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Inventory Model with Different Deterioration Rates

1
1
1
1
1
1
2
3
3
4
4

a 2 p1 +
a +b 1 p +b 1 ab 1 +
bp 1
1

2
2
6
6
4
4

+
1
+

+
b

( 1 - 2 )

1
1

2
2
2
2
a t 0 - 2 - p t 0 - 2 +
ab t 0 - 2 bp t0 - 2

2
2

+ 1 a t 3 - 3 - 1 p t 3 - 3 - a b ( t - ) + b p ( t - )
0 2
0 2
2
0
2
2
0
2

6
6
a 1 + b
1
1
1
1
- p
3
2
3
2
2
2
ab 2 t 0 - 2 +
bp 2 t0 - 2 a 2 t 0 - 2 +
p 2 t 0 - 2

6
6
2
2

1
1
2
2
2
2
2
2

bp 2 t0 - 2 a b 2 t 0 - 2 - a ( t 0 - 2 ) + p ( t 0 - 2 )
+
4
4

1
1
2
2
2
2
a +b 1 - 2 +
p + b 1 - 2 + a + b 2 ( 1 - 2 )

2
2

- p + b ( - ) + a b 2 - 2 - b p 2 - 2
2
1
2
2
1
2
2
1
2

1
2

1 + + b 1
2

1
1
1
1
1 2
2
3
3
4
pt0 +
abt 0 bpt0 +
at 0

at 0 2
2
6
6
12
+ p at 0 + b
1
1
1

4
5
5

pt0 abt 0 +
bpt0

12
12
12

- pt0

1 2
1 2 1
1 3

2
2 - p t 0 2 2 + ab t 0 2 2

a t 0 2
2
2
2
3

1 3
1
1 4
1
1 4
2
3
3
bp t0 2 2 +
a t 0 2 2 p t 0 2 2

3
6
4
6
4

1 3
1 3
1
1 5
1
1
1 3 2
2
2
- p a 2 + b - ab t 0 2 2 + b p t 0 2 2 ab t 0 2 2
- p 2
3
3
6
5
2

1
1
1
1
1
1
1
1

3
2
5
3
4
3
4

+ bp t 0 2 2 a t 0 2 2 + p t 0 2 2
5
2
4
2
4

3

6

1
1
1
1
1
1

2
3
5
2
3
5

p
t

a
b

0
2
2
0
2
2

4
5
4
5
3

1 2

T - p T t0
Tt0 2

+ p aT + b

1
1 3
2
bp t0T T - ab

1
2

1
1 3
2
2
T +
ab t 0T T
2
3

1
t 0T
2

1
3

1
3
T + b p t 0T

- pT
1 3
T
3

(20)

1
1
1
1 2
2
3
3
- p at 0 + b at 0 pt0 +
abt 0 bpt0 - pt0
2
6
6
2

The total profit during a cycle, (t0,T,p) consisted of the following:

( t 0 ,T ,p ) =

1
T

S R

- OC - HC - DC - SC

(21)

Substituting values from equations (16) to (20) in equation (21), we get total profit per unit. Putting 1= v1t0 and
2=v2t0 in equation (21), we get profit in terms of t 0, T and p. Differentiating equation (21) with respect to t0, T
and p and equate it to zero, we have

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Inventory Model with Different Deterioration Rates

(t 0 ,T ,p )

i.e.

t0

= 0,

(t 0 ,T ,p )

= 0,

(t 0 ,T ,p )
p

(22)

= 0

provided it satisfies the condition

( t 0 ,T ,p )

( t 0 ,T ,p )

( t 0 ,T ,p )

t0

t0T

t0p

( t 0 ,T ,p )

( t 0 ,T ,p )

( t 0 ,T ,p )

T t0

T p

( t 0 ,T ,p )

( t 0 ,T ,p )

pt0

pT

(23)

> 0

( t 0 ,T ,p )
2

IV. NUMERICAL EXAMPLE

Considering A= Rs.100, a = 500, b=0.05, c=Rs. 25, = 5, =0.05, x = Rs. 5, y=0.05, v1 = 0.30, v2 = 0.50, c2 =
Rs. 8, in appropriate units. The optimal values of t 0* = 0.4505, T* =0.5808, p* = 50.5313, and Profit*= Rs.
12162.9820.
The second order conditions given in equation (23) are also satisfied. The graphical representation of
the concavity of the profit function is also given.

t0 and Profit

T and Profit

p and Profit

Graph 2

Graph 3

Graph 1

V. SENSITIVITY ANALYSIS
On the basis of the data given in example above we have studied the sensitivity analysis by changing
the following parameters one at a time and keeping the rest fixed.

Parameter
a

%
+20%
+10%
-10%
-20%
+20%
+10%
-10%
-20%
+20%
+10%
-10%
-20%

Table 1
Sensitivity Analysis
t0
T
0.4569
0.5629
0.4526
0.5700
0.4516
0.5965
0.4567
0.6184
0.3794
0.5246
0.4115
0.5496
0.4991
0.6206
0.5628
0.6735
0.4397
0.5707
0.4465
0.5776
0.4546
0.5841
0.4589
0.5875

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p
60.5423
55.5345
45.5333
40.5414
50.5201
50.5246
50.5412
50.5564
50.5240
50.5297
50.5330
50.5348

Profit
17655.9523
14782.9921
9795.8726
7681.6778
12123.7579
12142.1646
12186.8211
12214.5794
12159.4220
12161.2015
12164.7889
12133.6245

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Inventory Model with Different Deterioration Rates

c2

+20%
+10%
-10%
-20%
+20%
+10%
-10%
-20%
+20%
+10%
-10%
-20%

0.4913
0.4714
0.4285
0.4050
0.4165
0.4313
0.4748
0.5122
0.4565
0.4537
0.4455
0.4404

0.6344
0.6082
0.5519
0.5212
0.5584
0.5679
0.5967
0.6245
0.5709
0.5756
0.5849
0.5907

50.5805
50.5565
50.5048
50.4767
42.1586
45.9632
56.1179
63.1107
50.5498
50.5411
50.5195
50.5074

12130.3498
12146.3045
12180.4949
12198.9846
10063.9856
11017.7569
13563.7951
15316.7190
12197.9785
12160.3310
12165.9827
12169.4242

From the table we observe that as parameter a increases/ decreases average total profit and optimum
order quantity also increases/ decreases.
Also, we observe that with increase and decrease in the value of , x and , there is corresponding
decrease/ increase in total profit and optimum order quantity.
From the table we observe that as parameter A increases/ decreases average total profit decreases/
increases and optimum order quantity increases/ decreases.

VI. CONCLUSION
In this paper, we have developed an inventory model for deteriorating items with price and inventory
dependent demand with different deterioration rates. Sensitivity with respect to parameters have been carried
out. The results show that with the increase/ decrease in the parameter values there is corresponding increase/
decrease in the value of profit.

REFERENCES
[1]
[2]
[3]
[4]
[5]
[6]
[7]
[8]
[9]
[10]
[11]
[12]
[13]
[14]
[15]
[16]

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