Abstract

In this paper, we will be considering a case of the subject of imperfection or deficiency in the inventory process ofa single commodity which has many components. For example, the deterioration of items in the stock is one component; another component is the quality of the items received in an inventory order. This has been investigated by many like Yano and Lee (1995) and silver (1976), where the imperfection of the order was due to defectiveness of items and shortages on the supply side with the amount of imperfection as a discrete randomvariable. We shall consider only the case of shortages of supply, but allow for continuous random variables bytaking the proportion of shortages relative to the order quantity. A mathematical model is developed where ananalytic expression for the economic order quantity is obtained. Special cases for the distribution of the proportion will be presented, along with numerical examples and comparisons to the classical model without shortages.

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