Optimal inventory policies for an economic order quantity model with decreasing cost functions

Optimal inventory policies for an economic order quantity model with decreasing cost functions

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Article ID: iaor20061537
Country: Netherlands
Volume: 165
Issue: 1
Start Page Number: 108
End Page Number: 126
Publication Date: Aug 2005
Journal: European Journal of Operational Research
Authors: ,
Keywords: optimization
Abstract:

In this paper, three total cost minimization EOQ based inventory problems are modeled and analyzed using geometric programming (GP) techniques. Through GP, optimal solutions for these models are found and sensitivity analysis is performed to investigate the effects of percentage changes in the primal objective function coefficients. The effects on the changes in the optimal order quantity and total cost when different parameters of the problems are changed is also investigated. In addition, a comparative analysis between the total cost minimization models and the basic EOQ model is conducted. By investigating the error in the optimal order quantity and total cost of these models, several interesting economic implications and managerial insights can be observed.

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