An Optimal Production Model For Disposing Excessive Deteriorating Stocks

Hui-Ming Wee *  Department of Industrial Engineering, Chung Yuan Christian University Chungli, Taiwan 32023, R.O.C.

Shen-Lian Chung Department of Information Management, St. John’s & St. Mary’s Institute of Technology, Tamsui, Taipei, Taiwan 25135, ROC

IM 20

Abstract 

This study develops an optimal production model for disposing excessive deteriorating stocks.

The objective is to determine the inventory retention levels to maximize the net benefit of the production system, and demonstrate the optimal salvage units to be disposed of at a certain salvage price and deterioration rate.

Numerical examples are presented to exemplify the theory. We have also shown that all units of a given item should be retained if the salvage price is less than or equal to the minimum economic salvage value. 

Keywords: retention level, excessive stocks, salvage units, salvage price, deteriorating inventory