settling the account. The model is illustrated with numerical examples.
Also, the sensitivity analysis of the model is examined for
changes in parameters.
2. Themathematical model
The following assumptions are made to develop the model.
(i) The demand rate for an item is represented by a quadratic and
continuous function of time.
(ii) Replenishment occurs instantaneously on ordering i.e.,, lead time
is zero.
(iii) The inventory system involves only single type of item.
(iv) Shortages are allowed and completely backlogged.
(v) No interest is to be charged after commencement of shortages.
(vi) No interest is to be earned after permissible delay periods.
(vii) The planning period is of infinite length.
We consider the following notation to develop the model.