Economic ordering model for deteriorating items with limited price information

Traditional economic ordering model for deteriorating items assume the procurer have full information about the procurement price. In this paper, we study an economic ordering model for constant deteriorating rate items with limited price information under relative performance criterion of the competitive ratio (CR). We provide a simply procurement strategy as well as the optimal ordering quantity for each case. This procurement strategy is real-time and doesn’t require any forecast, i.e., upon the arrival of price, the strategy concerning procurement time and quantity only be made based on arriving price and current inventory level, with entirely arbitrary non-stationary and even adversarial price sequence arrivals. A theoretical closed-form CR is also proven to give the performance guarantee. Our numerical experiments demonstrate even better empirical performance than the corresponding proven worst-case bounds.