An Optimal Procurement Policy for Items with Stock-Dependent Demand Rate and Fixed Lifetime

This paper investigates an optimal procurement policy for items with fixed lifetime. So any units which remain unused by their expiry date are considered outdated, and must be disposed of. The demand rate of items is assumed to be a function of current inventory level if the inventory is greater than or equal to S₀, and is constant if the inventory is less than S₀. For the system presented, a mathematical model and solution methodology are developed. At last, a numerical example is presented to illustrate the methodology.