A Deteriorating Two-Item Inventory Model with Continuously Decreasing Demand and Retroactive Holding Cost

Demand correlation among two interacting items is common in real-life markets. Sometimes demand of the first item would trigger additional demand toward the second item, but not vice versa. For items with decreasing demand in time, the longer is the selling period, the less the demand and the higher the inventory cost. This paper develops the related inventory model during which two deteriorating items are considered under the circumstances of retroactive increasing (decreasing) holding cost step function of storage time and two possible distinct selling periods as well. A sufficient condition to minimize total inventory cost per unit time is anticipated, via suitable control of the selling period. Ultimately, in response to the structure of holding cost, an efficient methodology for determining optimal selling periods is presented and demonstrated by numerical examples.