A production-inventory model for perishable items with demand dependent production rate, shortages and variable holding cost

ABSTRACT

This model investigates the optimal time at which a production cycle should be stopped and then resumed in a production-inventory system, in order to keep shortages under control. This study considers a perishable item that decays at a constant rate. Year 2020 has seen a sudden surge in the demand of masks, PPEs, etc. to combat COVID-19. Such demand, which follows an exponential distribution, has been considered. The production rate is taken to be a linear function of demand, so as to cope up with an exponential market demand. The holding cost is taken to be a linear function of time. Shortages are allowed to occur and are completely backlogged. This model handles variable production, variable demand and variable holding cost simultaneously. The model is illustrated by a numerical example. Sensitivity analysis is carried out and has been detailed with the help of graphs. A case study has also been done. Copyright © 2022 Inderscience Enterprises Ltd.