Technical Note—The EOQ Model under Stochastic Lead Time | Zendy

Matthew J. Liberatore | Zendy

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Technical Note—The EOQ Model under Stochastic Lead Time

Author(s) -

Matthew J. Liberatore

Publication year - 1979

Publication title -

operations research

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 3.797

H-Index - 140

eISSN - 1526-5463

pISSN - 0030-364X

DOI - 10.1287/opre.27.2.391

Subject(s) - economic order quantity , lead time , generalization , order (exchange) , mathematical optimization , stochastic modelling , computer science , upper and lower bounds , mathematics , economics , operations management , statistics , supply chain , mathematical analysis , finance , political science , law

We consider a continuous deterministic-demand, stochastic lead-time inventory model such that the individual unit demands are non-interchangeable. We derive equations that define the optimal values of the two decision variables: order size and timing. This model is shown to be a stochastic lead-time generalization of the EOQ model with backlogging of demand. An illustrative example is presented. Finally, a lower bound, which is independent of the order size, is developed for the optimal ordering time.

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