An exact formulation of inventory costs and optimal lot size in face of sudden obsolescence

An exact formulation of inventory costs and optimal lot size in face of sudden obsolescence

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Article ID: iaor1995427
Country: Netherlands
Volume: 14
Issue: 5
Start Page Number: 283
End Page Number: 290
Publication Date: Dec 1993
Journal: Operations Research Letters
Authors: ,
Abstract:

Recently, approximate formulas for determining the relevant total costs and the optimal lot size in face of sudden obsolescence were proposed. In this paper, the authors provide an exact formulation of the relevant costs which, when minimized, give the true optimal lot size. The estimation errors of the approximate model are significant in some situations, and the use of the present exact model is recommended.

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