An Inventory Decision Model with Variable Lead Time and Continuous Price Decrease

Abstract

This paper develops an inventory model with continuous product price decrease and variable lead time for minimizing the sum of the ordering cost, purchasing cost, holding cost, shortage cost and the lead time crashing cost, in which the number of equal length cycles, the order quantity and lead time are decision variables. An accurate approximate solution algorithm for the model is developed for finding the optimal values of decision variables. The effectiveness of the model is illustrated and the effects of changes in model parameters are analyzed with a numerical example.