An EOQ model under price change anticipation for a system with insufficient storage capacity

When a price change is announced in an inventory system, a one time decision has to be made to purchase a large quantity Q' before the price change becomes effective to take advantage of current lower price. This note considers a system having a limited storage capacity W•Q', so that additional units are required to be stored in rented warehouse. Optimum value of Q' and corresponding gain are determined. The model is illustrated with an example.