The Optimal Inventory Policy for Reusable Items with Random Planning Horizon Considering Present Value

Shou-Mei Su¹, Shy-Der Lin², Li-Fen Chang³

¹Department of Banking and Finance, Takming University of Science and Technology, Taipei City.
²Department of Applied Mathematics and Business Administration, Chung Yuan Christian University, Taoyuan.
³Department of Applied Mathematics, Chung Yuan Christian University, Taoyuan.

DOI: 10.4236/am.2014.52030                

Abstract

We discuss five areas of inventory model, including reusable raw material, EPQ model, optimization, random planning horizon and present value. In the traditional EPQ model, the stock-holding cost of raw material was not counted as a part of relevant cost. We explored the possibility of reducing a company’s impact on the environment and increasing their competitiveness by recycling their repair and waste disposal. The products are manufactured with reusable raw material. Our analysis takes into account the time value, and the present value method is applied to determine the optimal inventory policies for reusable items with random planning horizon. Results show how the heuristic approach can achieve global optimum. Numerical examples are given to validate the proposed system.

Keywords

Reusable; EPQ; Optimization; Random Planning Horizon; Present Value

Conflicts of Interest

The authors declare no conflicts of interest.

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