| Article ID: | iaor1990862 |
| Country: | United States |
| Volume: | 28 |
| Start Page Number: | 44 |
| End Page Number: | 47 |
| Publication Date: | Oct 1987 |
| Journal: | Production and Inventory Management Journal |
| Authors: | Selen Willem J., Wood Wallace R. |
While EOQ-type inventory models are ‘robust’ to cost and demand estimation errors, cost definition errors can be severe and have significant impact on decisions. Cost figures for such models must be carefully defined in order to avoid common accounting pitfalls. An example problem illustrating a common pitfall using average, rather than marginal, cost is presented.