This paper deals with an economic order quantity model where demand is stock dependent. Items received are not of perfect quality and each lot received contains percentage defective imperfect quality items, which follow a probability distribution. Two cases are considered. 1) Imperfect quality items are held in stock and sold in a single batch after a 100 percent screening process. 2) A hundred percent screening process is performed but the imperfect quality items are sold as soon as they are detected. Approximate optimal solutions are derived in both cases. | Yugoslav Journal of Operations Research Volume 20 (2010), Number 2, 237-247 DOI: AN EOQ MODEL WITH STOCK DEPENDENT DEMAND AND IMPERFECT QUALITY ITEMS Shibaji PANDA Department of Mathematics, Bengal Institute of Technology, Kolkata, India. shibaji_panda@ Received: July 2004 / Accepted: November 2010 Abstract: This paper deals with an economic order quantity model where demand is stock dependent. Items received are not of perfect quality and each lot received contains percentage defective imperfect quality items, which follow a probability distribution. Two cases are considered. 1) Imperfect quality items are held in stock and sold in a single batch after a 100 percent screening process. 2) A hundred percent screening process is performed but the imperfect quality items are sold as soon as they are detected. Approximate optimal solutions are derived in both cases. A numerical example is provided in order to illustrate the development of the model. Sensitivity analysis is also presented, indicating the effects of percentage imperfect quality items on the optimal order quantity and total profit. Keywords: Inventory, stock dependent demand, screening cost, imperfect quality items. AMS Mathematics Subject Classification : 90B05 1. INTRODUCTION The diversity of demand rate leads many departmental store managers to fall in some confusing situation. It is observed that for some items the demand rate is a combination of two parts. One is constant in nature and the other is proportional with the amount of inventory displayed. According to Levin et. al. [9] ”at times, the presence of inventory has a motivational effect on people around it. It is a common belief that large piles of goods displayed in the departmental store will lead the customer to buy more.” It was also investigated by Silver and Peterson [20] that retail level sales vary with the amount of inventory displayed. These observations impressed many researchers to investigate the .
