Abstract:
Business organizations that deal with consumable and perishable items have consistently accounted for enormous loss as a result of the nature of their goods. The losses have direct negative impact on revenues. Unplanned and lack of precise production prediction have contributed to huge losses in organizations. An appropriate prediction model developed to guide production plans and processes will help manufacturers in their decision making. The Economic Order Quantity (EOQ) for perishable goods with Weibull lifetime distribution and exponential demand rate proportional to price was developed for perishable goods. The differential equations governing the instantaneous state of inventory in the interval [0, t2] were obtained and solved for the equation of the quantity of inventory at time t. Using fixed parameters for the weibull and exponential distributions, simulation study was conducted on the derived EOQ model using R programming language to determine the behavior of the model in different scenarios. Real life data on six loafs of bread obtained from Afe Babalola University bakery were used. Result shows a good fit to the data and the average EOQ ranges from 60 to 400 loafs with ordering times of either 1 day or two days’ interval.
