Application of particle swarm optimization for solving deteriorating inventory model with fluctuating demand and controllable deterioration rate
Yu-Ren Chen and Chung-Yuan Dye
Abstract
In most of the inventory models in the literature, the deterioration rate of goods is viewed as an exogenous variable, which is not subject to control. In the real market, the retailer can reduce the deterioration rate of product by making effective capital investment in storehouse equipments. In this study, we formulate a deteriorating inventory model with time-varying demand by allowing preservation technology cost as a deci- sion variable in conjunction with replacement policy. The objective is to find the optimal replenishment and preservation technology investment strategies while minimizing the total cost over the planning horizon. For any given feasible replenishment scheme, we first prove that the optimal preservation technology investment strategy not only exists but is unique. Then, a particle swarm optimization is coded and used to solve the non- linear programming problem by employing the properties derived from this paper. Some numerical examples are used to illustrate the features of the proposed model.
Key words: inventory, time-varying demand, deterioration, preservation technology investment, particle swarm optimization
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