Journal ArticleDOI
Eoq formula: is it valid under inflationary conditions?
TLDR
In this paper, it was shown that changes in the inflation rate should not affect the cost of capital that is utilized in the economic order quantity (EOQ) formula for determining order quantities.Abstract:
The classical analysis of the economic order quantity (EOQ) problem ignores the effect of inflation. When a firm's cost factors are expected to rise at an annual rate of 10 percent or more, what adjustments in order quantities should the firm make to control its lot-size inventory (or cycle stock)? Using a model that includes both inflationary trends and time discounting, it is concluded that inflation brings no incentive either to increase or to decrease order quantities. In addition, order quantities can be computed using the classical EOQ formula under inflationary conditions, provided that the cost of capital invested in inventory is interpreted as an inflation-free cost. This interpretation implies that changes in the inflation rate should not affect the cost of capital that is utilized in the EOQ formula for determining order quantities.read more
Citations
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Journal ArticleDOI
A joint economic-lot-size model for purchaser and vendor
TL;DR: In this article, a joint economic-lot-size model for a special case where a vendor produces to order for a purchaser on a lot-for-lot basis under deterministic conditions is developed.
Journal ArticleDOI
Production lot sizing with machine breakdowns
TL;DR: In this article, the effects of machine breakdowns and corrective maintenance on the economic lot sizing decisions are investigated. But the authors focus on the effects on the effect of machine failure on the lot sizing decision.
Journal ArticleDOI
Probabilistic Analyses and Practical Algorithms for Inventory-Routing Models
TL;DR: This work considers a distribution system consisting of a single warehouse and many geographically dispersed retailers to identify a combined inventory policy and a routing strategy minimizing system-wide infinite horizon costs and constructs a very effective algorithm which is very effective on a set of randomly generated problems.
Book ChapterDOI
Chapter 1 Single-Product, single-Location models
Hau L. Lee,Steven Nahmias +1 more
TL;DR: The chapter presents an overview of the major developments and results for single product inventory management as well as a class of models based on the simplest demand assumption, that is, demand is deterministic and stationary.
Journal ArticleDOI
Inventory Theory
TL;DR: I became involved with inventory theory in 1955, but the proper starting point for this memoir is some years earlier, in the fall of 1951, when I began my graduate training in the Department of Mathematics at Princeton University.
References
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Journal ArticleDOI
Economic Order Quantities with Inflation
TL;DR: In this article, it is shown that with inflation the choice of the inventory carrying charge used in the EOQ formula can be changed with respect to all relevant costs and prices.
Journal ArticleDOI
A note on optimal inventory management under inflation
TL;DR: In this article, a discounted cost model that is similar to the classical economic order quantity model but includes inflation rates as parameters of the inventory system is developed. But the model does not consider the effect of price changes.
Journal ArticleDOI
Inventory decisions under inflationary conditions
Harold Bierman,Joseph Thomas +1 more
TL;DR: In this article, the authors investigate a model that includes both inflationary trends and time discounting and compare this model with the standard EOQ model and the analysis for a one-time change, found in previous literature.
Journal ArticleDOI
A comparison of order quantities computed using the average annual cost and the discounted cost
TL;DR: In this paper, the optimal order quantities determined by minimizing the average annual cost and minimizing the discounted cost over all future time for the simplest imaginable type of inventory model in which the demand rate is assumed to be deterministic and no stockouts are allowed.
Journal ArticleDOI
A present value formulation of the classical eoq problem
Robert R. Trippi,Donald E. Lewin +1 more
TL;DR: In this paper, the authors examined the present value of discounted costs over an infinite horizon, and discussed the differences in the solutions and implications of errors using the two methodologies, and proposed an alternative approach described in this paper.