Abstract

The classical EOQ model requires all the parameters to be constant. Subsequent development have considered models in which just one or more of the cost or demand parameters change at a point of time and, the number of units received does not necessarily match with the number of units ordered but has a known mean and variance. In practice, price rises are often announced, in advance, and such changes may affect the demand rate. We determine the optimal ordering policy for such systems and present a simple algorithm for computing it. This is supported by a numerical example, which shows some of the interdependencies of the various parameters.

Author: Khadija H. Lokhandwala, Nita H. Shah and Y. K. Shah

Received on: April, 2003

Accepted on: September, 2006