Design and analyze of EOQ model for seasonal products with demand as a sinusoidal function of time and variable holding cost
摘要
The Economic Order Quantity model, which is the most widely applied inventory management technique, usually considers constant demand and holding costs. However, for seasonal products, demand varies periodically, and the holding cost changes with inventory levels. The model can be made more complex when the products deteriorate with time. This paper develops an advanced EOQ model for seasonal products, in which demand follows a sinusoidal function, and holding cost varies with inventory levels. Furthermore, the rate of deterioration over time due to spoilage, obsolescence, or any other forms of deterioration of inventory value is taken into consideration within the model. The sinusoidal demand function can reflect the nature of the variations as seasonal patterns that tend to peak in some seasons and diminish during the others. A constant rate of deterioration implies that, over every unit of time, a fixed percentage loss is considered for inventory. The study explores both linear and non-linear functions for holding costs, acknowledging that inventory storage expenses may not always follow a simple linear progression. Specifically, the model includes various non-linear cost structures to reflect the complex nature of real-world storage costs, which may vary based on inventory levels, time, or other external factors. The total cost function is minimized and incorporates ordering, holding, and deterioration costs in order to get the optimal order quantity. It further carries sensitivity analysis in determining the effects of different deterioration rates, seasonal demand amplitudes, and variations in holding costs on the overall inventory costs as well as on the optimal order quantity.