We consider here the inventory replenishment problem over a finite time horizon with time-varying demand, equal replenishment cycles and shortages in every cycle under taking account of time discounting. This paper, we provide the proof of uniqueness of the optimal replenishment schedule and check the second-order optimality condition for the proposed model. Numerical examples and sensitivity analysis are also providing to illustrate the solution procedure. The advantage of allowing shortage in all cycles is also illustrated with numerical examples.
Journal of Statistics & Management systems 6(3), pp.519-536