Generalizing the price-break EOQ problem

This paper extends the price-discount, price-premium EOQ problem to consider price-elastic demand structures and various optimizing objectives, intended to measure profitability rather than cost. The model considers demand to be a function of the resale price, which, in turn, is a markup on the acquisition cost. The decision variables are the markup and the order quantity. The objectives being evaluated are profits, residual income and return on investment, the three most widely used measures of short-term profitability. A solution algorithm is presented and computational experience reported.