Optimal Policy for a Deteriorating Inventory Model with Finite Replenishment Rate and with Price Dependant Demand Rate and Cycle Length Dependant Price

In this paper, an inventory model with finite and constant replenishment rate, price dependant demand rate, time value of money and inflation, finite time horizon, lead time and exponential deterioration rate and with the objective of maximizing the present worth of the total system profit is developed. Using a dynamic programming based solution algorithm, we are able to find the optimal sequence of the cycles and also to obtain different optimal selling prices, optimal order quantities and optimal maximum inventories for the cycles with unequal lengths, which have never been done before for this model. We also use a numerical example to show accuracy of the solution procedure.