Inventory Optimization with Ramp-Type Demand, Time-Dependent Holding Costs, and Discounted Backorders under Inflation

Abstract

This study presents an inventory model with a ramp-type demand pattern, where holding costs increase over time, and inflation is taken into account. The model is particularly relevant for inventories like seasonal produce and newly launched fashion items. When stock runs out, the inventory manager offers a discount to customers willing to backorder their demand. The goal is to determine the optimal ordering policy and backorder discount by minimizing the total cost across a replenishment cycle. Finally, numerical results are provided to assess how the optimal policies respond to changes in key system parameters. Graphs are used to visualize the impact of these parameters on the total inventory cost, enhancing the understanding of the model.