Suchergebnisse

This paper examines the sensitivity of the Economic Order Quantity (EOQ) inventory model to lot size errors when the purchase cost per unit, C, and the replenishment cost per order, A, are both dependent on the amount ordered, Q. A formula for the percentage increase in average annual variable costs due to using a Q‐value different from Q is derived, and is shown to be the same as that for the simple EOQ and backorders model.

Optimal decision rules are presented for determining both the best stock‐up level and the best time to receive an order in a fixed order‐interval inventory system under certainty. In developing such rules, an important, but heretofore neglected, factor is taken explicitly into account, namely, the portion of the period during which no sales can occur. It is shown that unless the system is restocked at just the right time, the firm's actual cost per period may be many times higher than the minimum possible.

ABSTRACTThis note examines the sensitivity of the basic economic‐order‐quantity inventory model to lot‐size errors when holding costs are assumed to be a strictly increasing (though not necessarily linear) function of average inventory. In particular, we show that the penalty associated with ordering either too much or too little is a function not only of the size of the error but of the shape of the holding‐cost curve as well. We demonstrate that, under certain conditions, even relatively small lot‐size errors can be extremely costly.