A Generalized Economic Order Quantity Inventory Model with Shortage: Case Study of a Poultry Farmer Academic Article in Scopus uri icon

abstract

  • © 2018, King Fahd University of Petroleum & Minerals. We consider an EOQ inventory model for growing items, wherein the value and size of items increase during time, some instances of these items are livestock, fish, and poultry. The main difference between this inventory system and older ones is weight increment of products during stocking without buying more. This paper studies an inventory system of poultries that new-born items are fed to reach the ideal weight for consumers. In this study, based on the consumers¿ preference of fresh foods over frozen items, we assume that shortage is permitted and consumers wait for fresh items when company pays some additional penalties, i.e., the shortage is fully backordered. On the other hand, for each cycle, the producer must prepare the place in terms of hygiene conditions; thus, a setup time per cycle is considered. The aim of this study is to obtain optimum system solution, such that total costs, including setup, purchasing, holding, feeding, and shortage, are minimized. To do so, we employ mathematical measures to approximate growing rates and model the system as a non-linear programming. To solve the obtained optimization model, we employ hessian matrix to obtain optimal solution for this inventory system. The proposed EOQ inventory model helps poultry industries in Iran to optimize their system considering costs and permissible shortage, and it can be employed in other countries. Finally, we provide a numerical example and its sensitivity analysis, plus some potential future directions.

publication date

  • March 11, 2019