Inventory modelling and optimization for high technology products with successive generations

Abstract

Conventionally, most of the classical inventory modelling and optimization work has assumed that the product is a non-changing entity with a constant life cycle and a constant demand. However, as elaborated above, we know that this is not true in the modern world where we observe that the successful newlineproducts in the market are generally substituted by newer generation products. We have plenty of such newlineexamples: televisions, cellular phones, computers, video-game consols, etc. The demand of these products is governed by the lifecycle dynamics, and thus, best explained by the innovation diffusion theories. Managing the supply chain of such products is a big challenge for the manufacturers and newlinedistribution partners involved in their business transactions. newlineNumerous extensions of the Basic EOQ Model have been worked upon since the time Harris came up with the basic model in 1913. One of those is the adaptation of this Model to the non-constant demand rate (time-dependent, credit-dependent, stock dependent, price dependent, etc.). Another extension is newlinethe consideration of multiple items in the inventory replenishment decisions that encompass assortment optimization and inventory optimization, with related dynamics of pricing, capacity, etc. Multi-item newlineinventory models deal in the management of more than one product in the supply chains. There has been substantial amount of research work on the multi-items inventory modelling and joint replenishment. But the research on the inventory modelling for multi-generational products is still rare. Although there have been many models that have been built to ascertain the demand pattern of technology products. But very limited work has been done on the inventory modelling for technology newlineproducts that come in generations. newlineSince the studies on the inventory optimization research in the domain of technology generations are rare to be found, this study intends to develop the EOQ Models for the inventory replenishment of technology products.