The impact of time-varying demand and production rates on determining inventory policy

This paper addresses the issues of the optimal replenishment schedule for the inventory system of deteriorating items with time-varying demand and time-varying production rates. We point out the importance of the relationship between the replenishment rate and demand rate in the proof procedure. The purpose of the paper is threefold. First, we review some related works and discuss on their solution procedures whereby some points are to be improved. Second, we provide a method to locate the optimal replenishment policy. Third, we find our result is interesting: In our method, the restrictions on the relation between the replenishment rate and the demand rate become self-originated. From this paper we may gain an insightful understanding of the relationship between the production rate and the demand rate on determining inventory policy. Copyright Springer-Verlag Berlin Heidelberg 2001