The optimality representation of a finite-life inventory model with exiguous defectives with Hessian matrix approach

Abstract

Businesses use inventory modelling to estimate the ideal level of inventories to be kept in a production process. This procedure entails controlling the quantity of goods or raw materials to be stored, the frequency of orders, and the supply flow. The primary task would be to reduce the overall cost incurred during the production process. This study examines a finite-life inventory model that permits a very small number of defective products, illustrates the optimal order quantity, and explores how to optimal the second-degree total cost function while validating its optimality with a Hessian matrix. In addition, a numerical analysis is performed, and the findings are described.